Correlation Between American Homes and Equity Lifestyle
Can any of the company-specific risk be diversified away by investing in both American Homes 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 Homes 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 Homes 4 and Equity Lifestyle Properties, you can compare the effects of market volatilities on American Homes 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 Homes with a short position of Equity Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Equity Lifestyle.
Diversification Opportunities for American Homes and Equity Lifestyle
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Equity is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 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 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 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 Homes i.e., American Homes and Equity Lifestyle go up and down completely randomly.
Pair Corralation between American Homes and Equity Lifestyle
Considering the 90-day investment horizon American Homes 4 is expected to under-perform the Equity Lifestyle. In addition to that, American Homes is 1.03 times more volatile than Equity Lifestyle Properties. It trades about -0.16 of its total potential returns per unit of risk. Equity Lifestyle Properties is currently generating about 0.02 per unit of volatility. If you would invest 6,104 in Equity Lifestyle Properties on September 8, 2025 and sell it today you would earn a total of 65.00 from holding Equity Lifestyle Properties or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. Equity Lifestyle Properties
Performance |
| Timeline |
| American Homes 4 |
| Equity Lifestyle Pro |
American Homes and Equity Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Equity Lifestyle
The main advantage of trading using opposite American Homes and Equity Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes 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.| American Homes vs. Tokyo Steel Manufacturing | American Homes vs. Technology Telecommunication Acquisition | American Homes vs. Wireless Xcessories Group | American Homes vs. DATA Communications Management |
| Equity Lifestyle vs. The Dewey Electronics | Equity Lifestyle vs. Richardson Electronics | Equity Lifestyle vs. Costco Wholesale Corp | Equity Lifestyle vs. Caseys General Stores |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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