Correlation Between Independence Realty and VHAI

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

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

Diversification Opportunities for Independence Realty and VHAI

-0.18

Correlation Coefficient

Independence Realty  VHAI

Good diversification

The 3 months correlation between Independence and VHAI is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI and Independence Realty 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 Independence Realty Trust are associated (or correlated) with VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Independence Realty i.e., Independence Realty and VHAI go up and down completely randomly.

Pair Corralation between Independence Realty and VHAI

Considering the 90-day investment horizon Independence Realty Trust is expected to generate 0.13 times more return on investment than VHAI. However, Independence Realty Trust is 7.59 times less risky than VHAI. It trades about 0.04 of its potential returns per unit of risk. VHAI is currently generating about -0.17 per unit of risk. If you would invest  1,538  in Independence Realty Trust on September 30, 2024 and sell it today you would earn a total of  458.00  from holding Independence Realty Trust or generate 29.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.03%
Values	Daily Returns

Independence Realty Trust  vs.  VHAI

Independence Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Independence Realty is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

VHAI

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating basic indicators, VHAI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Independence Realty and VHAI

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

The idea behind Independence Realty Trust and VHAI 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.