Correlation Between Xenia Hotels and Diversified Healthcare
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Diversified Healthcare 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 Diversified Healthcare 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 Diversified Healthcare Trust, you can compare the effects of market volatilities on Xenia Hotels and Diversified Healthcare 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 Diversified Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Diversified Healthcare.
Diversification Opportunities for Xenia Hotels and Diversified Healthcare
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xenia and Diversified is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare 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 Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Diversified Healthcare go up and down completely randomly.
Pair Corralation between Xenia Hotels and Diversified Healthcare
Assuming the 90 days trading horizon Xenia Hotels is expected to generate 8.95 times less return on investment than Diversified Healthcare. But when comparing it to its historical volatility, Xenia Hotels Resorts is 2.93 times less risky than Diversified Healthcare. It trades about 0.02 of its potential returns per unit of risk. Diversified Healthcare Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Diversified Healthcare Trust on October 12, 2024 and sell it today you would earn a total of 139.00 from holding Diversified Healthcare Trust or generate 204.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. Diversified Healthcare Trust
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Diversified Healthcare |
Xenia Hotels and Diversified Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Diversified Healthcare
The main advantage of trading using opposite Xenia Hotels and Diversified Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Diversified Healthcare 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 Diversified Healthcare will offset losses from the drop in Diversified Healthcare's long position.| Xenia Hotels vs. CRISPR Therapeutics AG | Xenia Hotels vs. Liberty Broadband | Xenia Hotels vs. Hemisphere Energy Corp | Xenia Hotels vs. INTERSHOP Communications Aktiengesellschaft |
| Diversified Healthcare vs. Apple Inc | Diversified Healthcare vs. Apple Inc | Diversified Healthcare vs. Apple Inc | Diversified Healthcare vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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