Correlation Between Xenia Hotels and Home Depot
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Home Depot 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 Home Depot 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 The Home Depot, you can compare the effects of market volatilities on Xenia Hotels and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Home Depot.
Diversification Opportunities for Xenia Hotels and Home Depot
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xenia and Home is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Home Depot go up and down completely randomly.
Pair Corralation between Xenia Hotels and Home Depot
Assuming the 90 days trading horizon Xenia Hotels is expected to generate 2.04 times less return on investment than Home Depot. In addition to that, Xenia Hotels is 1.46 times more volatile than The Home Depot. It trades about 0.02 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.06 per unit of volatility. If you would invest 27,658 in The Home Depot on October 19, 2024 and sell it today you would earn a total of 12,287 from holding The Home Depot or generate 44.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. The Home Depot
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Home Depot |
Xenia Hotels and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Home Depot
The main advantage of trading using opposite Xenia Hotels and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Xenia Hotels vs. GRIFFIN MINING LTD | Xenia Hotels vs. GALENA MINING LTD | Xenia Hotels vs. De Grey Mining | Xenia Hotels vs. UPDATE SOFTWARE |
| Home Depot vs. IDP EDUCATION LTD | Home Depot vs. Soken Chemical Engineering | Home Depot vs. SEKISUI CHEMICAL | Home Depot vs. Sanyo Chemical Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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