Correlation Between Xenia Hotels and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and ALGOMA STEEL 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 Xenia Hotels and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Xenia Hotels and ALGOMA STEEL 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 Xenia Hotels with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and ALGOMA STEEL.
Diversification Opportunities for Xenia Hotels and ALGOMA STEEL
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xenia and ALGOMA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP and Xenia Hotels 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 Xenia Hotels Resorts are associated (or correlated) with ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between Xenia Hotels and ALGOMA STEEL
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 0.7 times more return on investment than ALGOMA STEEL. However, Xenia Hotels Resorts is 1.44 times less risky than ALGOMA STEEL. It trades about -0.11 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.34 per unit of risk. If you would invest 1,477 in Xenia Hotels Resorts on October 17, 2024 and sell it today you would lose (67.00) from holding Xenia Hotels Resorts or give up 4.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| Xenia Hotels Resorts |
| ALGOMA STEEL GROUP |
Xenia Hotels and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and ALGOMA STEEL
The main advantage of trading using opposite Xenia Hotels and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Park Hotels Resorts | Xenia Hotels vs. Pebblebrook Hotel Trust | Xenia Hotels vs. Sunstone Hotel Investors |
| ALGOMA STEEL vs. Micron Technology | ALGOMA STEEL vs. COLUMBIA SPORTSWEAR | ALGOMA STEEL vs. NTG Nordic Transport | ALGOMA STEEL vs. United Utilities Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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