Correlation Between Xenia Hotels and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on Xenia Hotels and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Eastman Chemical.
Diversification Opportunities for Xenia Hotels and Eastman Chemical
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xenia and Eastman is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Eastman Chemical go up and down completely randomly.
Pair Corralation between Xenia Hotels and Eastman Chemical
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 1.13 times more return on investment than Eastman Chemical. However, Xenia Hotels is 1.13 times more volatile than Eastman Chemical. It trades about 0.05 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.03 per unit of risk. If you would invest 1,420 in Xenia Hotels Resorts on November 2, 2024 and sell it today you would earn a total of 20.00 from holding Xenia Hotels Resorts or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. Eastman Chemical
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Eastman Chemical |
Xenia Hotels and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Eastman Chemical
The main advantage of trading using opposite Xenia Hotels and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Xenia Hotels vs. AWILCO DRILLING PLC | Xenia Hotels vs. Southwest Airlines Co | Xenia Hotels vs. Major Drilling Group | Xenia Hotels vs. Canadian Utilities Limited |
| Eastman Chemical vs. AEON STORES | Eastman Chemical vs. PLAYTIKA HOLDING DL 01 | Eastman Chemical vs. Retail Estates NV | Eastman Chemical vs. ePlay Digital |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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