Correlation Between Invitation Homes and CoStar

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

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

Diversification Opportunities for Invitation Homes and CoStar

-0.83

Correlation Coefficient

Invitation Homes  CoStar

Pay attention - limited upside

The 3 months correlation between Invitation and CoStar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invitation Homes and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Invitation Homes i.e., Invitation Homes and CoStar go up and down completely randomly.

Pair Corralation between Invitation Homes and CoStar

Given the investment horizon of 90 days Invitation Homes is expected to under-perform the CoStar. But the stock apears to be less risky and, when comparing its historical volatility, Invitation Homes is 1.62 times less risky than CoStar. The stock trades about -0.17 of its potential returns per unit of risk. The CoStar Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,691  in CoStar Group on May 19, 2025 and sell it today you would earn a total of  1,275  from holding CoStar Group or generate 16.58% return on investment over 90 days.

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

Invitation Homes  vs.  CoStar Group

Invitation Homes

Risk-Adjusted Performance

Weakest

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.

CoStar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invitation Homes and CoStar

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

The idea behind Invitation Homes and CoStar Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.