Correlation Between American Campus and Equity Lifestyle

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Can any of the company-specific risk be diversified away by investing in both American Campus and Equity Lifestyle 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 Campus and Equity Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Campus Communities and Equity Lifestyle Properties, you can compare the effects of market volatilities on American Campus and Equity Lifestyle 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 Campus with a short position of Equity Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Campus and Equity Lifestyle.

Diversification Opportunities for American Campus and Equity Lifestyle

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between American and Equity is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Campus Communities and Equity Lifestyle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Lifestyle Pro and American Campus 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 Campus Communities are associated (or correlated) with Equity Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Lifestyle Pro has no effect on the direction of American Campus i.e., American Campus and Equity Lifestyle go up and down completely randomly.

Pair Corralation between American Campus and Equity Lifestyle

If you would invest  6,542  in American Campus Communities on December 29, 2023 and sell it today you would earn a total of  0.00  from holding American Campus Communities or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy0.35%
ValuesDaily Returns

American Campus Communities  vs.  Equity Lifestyle Properties

 Performance 
       Timeline  
American Campus Comm 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days American Campus Communities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, American Campus is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Equity Lifestyle Pro 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

American Campus and Equity Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Campus and Equity Lifestyle

The main advantage of trading using opposite American Campus and Equity Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Campus position performs unexpectedly, Equity Lifestyle 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 Equity Lifestyle will offset losses from the drop in Equity Lifestyle's long position.
The idea behind American Campus Communities and Equity Lifestyle Properties 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.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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