Correlation Between Xenia Hotels and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Xenia Hotels and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Host Hotels.
Diversification Opportunities for Xenia Hotels and Host Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xenia and Host is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Host Hotels go up and down completely randomly.
Pair Corralation between Xenia Hotels and Host Hotels
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 1.16 times more return on investment than Host Hotels. However, Xenia Hotels is 1.16 times more volatile than Host Hotels Resorts. It trades about 0.1 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest 1,279 in Xenia Hotels Resorts on November 1, 2024 and sell it today you would earn a total of 161.00 from holding Xenia Hotels Resorts or generate 12.59% 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. Host Hotels Resorts
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Host Hotels Resorts |
Xenia Hotels and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Host Hotels
The main advantage of trading using opposite Xenia Hotels and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' 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 |
| Host Hotels vs. The Hanover Insurance | Host Hotels vs. Direct Line Insurance | Host Hotels vs. Planet Fitness | Host Hotels vs. Universal Health Realty |
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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