Correlation Between Clipper Realty and Invitation Homes

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

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

Diversification Opportunities for Clipper Realty and Invitation Homes

-0.15

Correlation Coefficient

Clipper Realty  Invitation Homes

Good diversification

The 3 months correlation between Clipper and Invitation is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Realty and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes and Clipper Realty 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 Clipper Realty 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 Clipper Realty i.e., Clipper Realty and Invitation Homes go up and down completely randomly.

Pair Corralation between Clipper Realty and Invitation Homes

Given the investment horizon of 90 days Clipper Realty is expected to generate 4.66 times more return on investment than Invitation Homes. However, Clipper Realty is 4.66 times more volatile than Invitation Homes. It trades about 0.03 of its potential returns per unit of risk. Invitation Homes is currently generating about -0.08 per unit of risk. If you would invest  519.00  in Clipper Realty on September 26, 2024 and sell it today you would earn a total of  17.00  from holding Clipper Realty or generate 3.28% return on investment over 90 days.

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

Clipper Realty  vs.  Invitation Homes

Clipper Realty

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clipper Realty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Clipper Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Invitation Homes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Clipper Realty and Invitation Homes

The main advantage of trading using opposite Clipper Realty and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clipper Realty 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' long position.

The idea behind Clipper Realty and Invitation Homes 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.