Correlation Between Xenia Hotels and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Nippon 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 Nippon 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 Nippon Steel, you can compare the effects of market volatilities on Xenia Hotels and Nippon 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Nippon Steel.
Diversification Opportunities for Xenia Hotels and Nippon Steel
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xenia and Nippon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Nippon Steel go up and down completely randomly.
Pair Corralation between Xenia Hotels and Nippon Steel
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to under-perform the Nippon Steel. But the stock apears to be less risky and, when comparing its historical volatility, Xenia Hotels Resorts is 1.06 times less risky than Nippon Steel. The stock trades about -0.11 of its potential returns per unit of risk. The Nippon Steel is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,875 in Nippon Steel on October 17, 2024 and sell it today you would lose (21.00) from holding Nippon Steel or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. Nippon Steel
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Nippon Steel |
Xenia Hotels and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Nippon Steel
The main advantage of trading using opposite Xenia Hotels and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Nippon 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 Nippon Steel will offset losses from the drop in Nippon 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 |
| Nippon Steel vs. Wizz Air Holdings | Nippon Steel vs. SYSTEMAIR AB | Nippon Steel vs. Pentair plc | Nippon Steel vs. Ryanair Holdings plc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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