Correlation Between Invitation Homes and Clipper Realty

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

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

Diversification Opportunities for Invitation Homes and Clipper Realty

-0.15

Correlation Coefficient

Invitation Homes  Clipper Realty

Good diversification

The 3 months correlation between Invitation and Clipper is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Invitation Homes and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty and Invitation 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 Invitation Homes are associated (or correlated) with Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of Invitation Homes i.e., Invitation Homes and Clipper Realty go up and down completely randomly.

Pair Corralation between Invitation Homes and Clipper Realty

Given the investment horizon of 90 days Invitation Homes is expected to generate 3.24 times less return on investment than Clipper Realty. But when comparing it to its historical volatility, Invitation Homes is 2.76 times less risky than Clipper Realty. It trades about 0.03 of its potential returns per unit of risk. Clipper Realty is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  458.00  in Clipper Realty on September 26, 2024 and sell it today you would earn a total of  78.00  from holding Clipper Realty or generate 17.03% return on investment over 90 days.

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

Invitation Homes  vs.  Clipper Realty

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 weak 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.

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.

Pair Trading with Invitation Homes and Clipper Realty

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

The idea behind Invitation Homes and Clipper Realty 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.