Correlation Between Tri Pointe and FISH PAYK

Can any of the company-specific risk be diversified away by investing in both Tri Pointe and FISH PAYK at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tri Pointe and FISH PAYK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tri Pointe Homes and FISH PAYK HEALTH, you can compare the effects of market volatilities on Tri Pointe and FISH PAYK and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tri Pointe with a short position of FISH PAYK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Pointe and FISH PAYK.

Diversification Opportunities for Tri Pointe and FISH PAYK

0.76

Correlation Coefficient

Tri Pointe  FISH PAYK

Poor diversification

The 3 months correlation between Tri and FISH is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tri Pointe Homes and FISH PAYK HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FISH PAYK HEALTH and Tri Pointe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tri Pointe Homes are associated (or correlated) with FISH PAYK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FISH PAYK HEALTH has no effect on the direction of Tri Pointe i.e., Tri Pointe and FISH PAYK go up and down completely randomly.

Pair Corralation between Tri Pointe and FISH PAYK

Assuming the 90 days horizon Tri Pointe Homes is expected to generate 1.25 times more return on investment than FISH PAYK. However, Tri Pointe is 1.25 times more volatile than FISH PAYK HEALTH. It trades about -0.09 of its potential returns per unit of risk. FISH PAYK HEALTH is currently generating about -0.12 per unit of risk. If you would invest  3,420  in Tri Pointe Homes on December 28, 2024 and sell it today you would lose (480.00) from holding Tri Pointe Homes or give up 14.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tri Pointe Homes  vs.  FISH PAYK HEALTH

Tri Pointe Homes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tri Pointe Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FISH PAYK HEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days FISH PAYK HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tri Pointe and FISH PAYK

The main advantage of trading using opposite Tri Pointe and FISH PAYK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Pointe position performs unexpectedly, FISH PAYK can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FISH PAYK will offset losses from the drop in FISH PAYK's long position.

The idea behind Tri Pointe Homes and FISH PAYK HEALTH pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..