Correlation Between Equity Lifestyle and American Homes
Can any of the company-specific risk be diversified away by investing in both Equity Lifestyle and American 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 Equity Lifestyle and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Lifestyle Properties and American Homes 4, you can compare the effects of market volatilities on Equity Lifestyle and American 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 Equity Lifestyle with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Lifestyle and American Homes.
Diversification Opportunities for Equity Lifestyle and American Homes
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equity and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Equity Lifestyle 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 Equity Lifestyle Properties are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Equity Lifestyle i.e., Equity Lifestyle and American Homes go up and down completely randomly.
Pair Corralation between Equity Lifestyle and American Homes
Considering the 90-day investment horizon Equity Lifestyle Properties is expected to under-perform the American Homes. In addition to that, Equity Lifestyle is 1.12 times more volatile than American Homes 4. It trades about -0.16 of its total potential returns per unit of risk. American Homes 4 is currently generating about -0.14 per unit of volatility. If you would invest 3,622 in American Homes 4 on January 20, 2024 and sell it today you would lose (119.00) from holding American Homes 4 or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Lifestyle Properties vs. American Homes 4
Performance |
| Timeline |
| Equity Lifestyle Pro |
| American Homes 4 |
Equity Lifestyle and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Lifestyle and American Homes
The main advantage of trading using opposite Equity Lifestyle and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle position performs unexpectedly, American 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 American Homes will offset losses from the drop in American Homes' long position.| Equity Lifestyle vs. UMH Properties | Equity Lifestyle vs. UDR Inc | Equity Lifestyle vs. AvalonBay Communities | Equity Lifestyle vs. Nexpoint Residential Trust |
| American Homes vs. Sun Communities | American Homes vs. Clipper Realty | American Homes vs. UDR Inc | American Homes vs. UMH Properties |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |