Correlation Between American Homes and Americold Realty

Can any of the company-specific risk be diversified away by investing in both American Homes and Americold Realty 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 Americold Realty 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 Americold Realty Trust, you can compare the effects of market volatilities on American Homes and Americold Realty 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 Americold Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Americold Realty.

Diversification Opportunities for American Homes and Americold Realty

0.45

Correlation Coefficient

American Homes  Americold Realty

Very weak diversification

The 3 months correlation between American and Americold is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Americold Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americold Realty Trust 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 Americold Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americold Realty Trust has no effect on the direction of American Homes i.e., American Homes and Americold Realty go up and down completely randomly.

Pair Corralation between American Homes and Americold Realty

Considering the 90-day investment horizon American Homes 4 is expected to generate 0.7 times more return on investment than Americold Realty. However, American Homes 4 is 1.43 times less risky than Americold Realty. It trades about -0.11 of its potential returns per unit of risk. Americold Realty Trust is currently generating about -0.23 per unit of risk. If you would invest  3,935  in American Homes 4 on September 20, 2024 and sell it today you would lose (339.00) from holding American Homes 4 or give up 8.61% of portfolio value over 90 days.

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

American Homes 4  vs.  Americold Realty Trust

American Homes 4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Americold Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Americold Realty Trust 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 essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with American Homes and Americold Realty

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

The idea behind American Homes 4 and Americold Realty Trust 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 Stocks Directory module to find actively traded stocks across global markets.