Correlation Between Vastned Retail and INVITATION HOMES

Can any of the company-specific risk be diversified away by investing in both Vastned Retail and INVITATION HOMES 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 Vastned Retail and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vastned Retail NV and INVITATION HOMES DL, you can compare the effects of market volatilities on Vastned Retail and INVITATION HOMES 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 Vastned Retail with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and INVITATION HOMES.

Diversification Opportunities for Vastned Retail and INVITATION HOMES

0.13

Correlation Coefficient

Vastned Retail  INVITATION HOMES

Average diversification

The 3 months correlation between Vastned and INVITATION is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Vastned Retail i.e., Vastned Retail and INVITATION HOMES go up and down completely randomly.

Pair Corralation between Vastned Retail and INVITATION HOMES

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the INVITATION HOMES. In addition to that, Vastned Retail is 1.81 times more volatile than INVITATION HOMES DL. It trades about -0.28 of its total potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.12 per unit of volatility. If you would invest  3,130  in INVITATION HOMES DL on October 7, 2024 and sell it today you would lose (50.00) from holding INVITATION HOMES DL or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.24%
Values	Daily Returns

Vastned Retail NV  vs.  INVITATION HOMES DL

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INVITATION HOMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INVITATION HOMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vastned Retail and INVITATION HOMES

The main advantage of trading using opposite Vastned Retail and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vastned Retail position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.

The idea behind Vastned Retail NV and INVITATION HOMES DL 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.