Correlation Between Xenia Hotels and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Discover Financial 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 Discover Financial 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 Discover Financial Services, you can compare the effects of market volatilities on Xenia Hotels and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Discover Financial.
Diversification Opportunities for Xenia Hotels and Discover Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xenia and Discover is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Discover Financial go up and down completely randomly.
Pair Corralation between Xenia Hotels and Discover Financial
Assuming the 90 days trading horizon Xenia Hotels is expected to generate 3.39 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Xenia Hotels Resorts is 1.26 times less risky than Discover Financial. It trades about 0.02 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,883 in Discover Financial Services on October 11, 2024 and sell it today you would earn a total of 8,103 from holding Discover Financial Services or generate 91.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. Discover Financial Services
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Discover Financial |
Xenia Hotels and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Discover Financial
The main advantage of trading using opposite Xenia Hotels and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Xenia Hotels vs. Federal Agricultural Mortgage | Xenia Hotels vs. Ryanair Holdings plc | Xenia Hotels vs. WIZZ AIR HLDGUNSPADR4 | Xenia Hotels vs. FARM 51 GROUP |
| Discover Financial vs. Xenia Hotels Resorts | Discover Financial vs. Hyatt Hotels | Discover Financial vs. Automatic Data Processing | Discover Financial vs. InterContinental Hotels 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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