Correlation Between Home Capital and Neinor Homes

Can any of the company-specific risk be diversified away by investing in both Home Capital and Neinor 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 Home Capital and Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Capital Rentals and Neinor Homes SLU, you can compare the effects of market volatilities on Home Capital and Neinor 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 Home Capital with a short position of Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Neinor Homes.

Diversification Opportunities for Home Capital and Neinor Homes

-0.75

Correlation Coefficient

Home Capital  Neinor Homes

Pay attention - limited upside

The 3 months correlation between Home and Neinor is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Neinor Homes SLU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SLU and Home Capital 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 Home Capital Rentals are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SLU has no effect on the direction of Home Capital i.e., Home Capital and Neinor Homes go up and down completely randomly.

Pair Corralation between Home Capital and Neinor Homes

If you would invest  660.00  in Home Capital Rentals on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Home Capital Rentals or generate 0.0% return on investment over 90 days.

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

Home Capital Rentals  vs.  Neinor Homes SLU

Home Capital Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Capital Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Neinor Homes SLU

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SLU are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Neinor Homes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Home Capital and Neinor Homes

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

The idea behind Home Capital Rentals and Neinor Homes SLU 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.