Correlation Between CREDIT AGRICOLE and American Homes
Can any of the company-specific risk be diversified away by investing in both CREDIT AGRICOLE and American 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 CREDIT AGRICOLE and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CREDIT AGRICOLE and American Homes 4, you can compare the effects of market volatilities on CREDIT AGRICOLE and American 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 CREDIT AGRICOLE with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREDIT AGRICOLE and American Homes.
Diversification Opportunities for CREDIT AGRICOLE and American Homes
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CREDIT and American is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CREDIT AGRICOLE and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and CREDIT AGRICOLE 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 CREDIT AGRICOLE are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of CREDIT AGRICOLE i.e., CREDIT AGRICOLE and American Homes go up and down completely randomly.
Pair Corralation between CREDIT AGRICOLE and American Homes
Assuming the 90 days trading horizon CREDIT AGRICOLE is expected to generate 0.77 times more return on investment than American Homes. However, CREDIT AGRICOLE is 1.31 times less risky than American Homes. It trades about 0.07 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of risk. If you would invest 892.00 in CREDIT AGRICOLE on October 2, 2024 and sell it today you would earn a total of 441.00 from holding CREDIT AGRICOLE or generate 49.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CREDIT AGRICOLE vs. American Homes 4
Performance |
Timeline |
CREDIT AGRICOLE |
American Homes 4 |
CREDIT AGRICOLE and American Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CREDIT AGRICOLE and American Homes
The main advantage of trading using opposite CREDIT AGRICOLE and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREDIT AGRICOLE position performs unexpectedly, American 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 American Homes will offset losses from the drop in American Homes' long position.CREDIT AGRICOLE vs. United Breweries Co | CREDIT AGRICOLE vs. The Boston Beer | CREDIT AGRICOLE vs. UET United Electronic | CREDIT AGRICOLE vs. Molson Coors Beverage |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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