Correlation Between American Homes and CN MODERN
Can any of the company-specific risk be diversified away by investing in both American Homes and CN MODERN 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 American Homes and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and CN MODERN DAIRY, you can compare the effects of market volatilities on American Homes and CN MODERN 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 American Homes with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and CN MODERN.
Diversification Opportunities for American Homes and CN MODERN
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and 07M is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and American Homes 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 American Homes 4 are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of American Homes i.e., American Homes and CN MODERN go up and down completely randomly.
Pair Corralation between American Homes and CN MODERN
Assuming the 90 days trading horizon American Homes 4 is expected to under-perform the CN MODERN. But the stock apears to be less risky and, when comparing its historical volatility, American Homes 4 is 2.57 times less risky than CN MODERN. The stock trades about -0.01 of its potential returns per unit of risk. The CN MODERN DAIRY is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9.15 in CN MODERN DAIRY on September 24, 2024 and sell it today you would earn a total of 1.85 from holding CN MODERN DAIRY or generate 20.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
American Homes 4 vs. CN MODERN DAIRY
Performance |
Timeline |
American Homes 4 |
CN MODERN DAIRY |
American Homes and CN MODERN Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and CN MODERN
The main advantage of trading using opposite American Homes and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.American Homes vs. Fevertree Drinks PLC | American Homes vs. MAGNUM MINING EXP | American Homes vs. United Breweries Co | American Homes vs. THAI BEVERAGE |
CN MODERN vs. Align Technology | CN MODERN vs. Amkor Technology | CN MODERN vs. Haier Smart Home | CN MODERN vs. American Homes 4 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Global Correlations Find global opportunities by holding instruments from different markets | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |