Correlation Between Pure Storage and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Pure Storage and Xenia 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 Pure Storage and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Xenia Hotels Resorts, you can compare the effects of market volatilities on Pure Storage and Xenia 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 Pure Storage with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Xenia Hotels.
Diversification Opportunities for Pure Storage and Xenia Hotels
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pure and Xenia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and Pure Storage 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 Pure Storage are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Pure Storage i.e., Pure Storage and Xenia Hotels go up and down completely randomly.
Pair Corralation between Pure Storage and Xenia Hotels
Assuming the 90 days horizon Pure Storage is expected to generate 1.0 times less return on investment than Xenia Hotels. In addition to that, Pure Storage is 1.15 times more volatile than Xenia Hotels Resorts. It trades about 0.12 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.14 per unit of volatility. If you would invest 1,330 in Xenia Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Xenia Hotels Resorts or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. Xenia Hotels Resorts
Performance |
| Timeline |
| Pure Storage |
| Xenia Hotels Resorts |
Pure Storage and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and Xenia Hotels
The main advantage of trading using opposite Pure Storage and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, Xenia 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| Pure Storage vs. Superior Plus Corp | Pure Storage vs. NMI Holdings | Pure Storage vs. Origin Agritech | Pure Storage vs. SIVERS SEMICONDUCTORS AB |
| Xenia Hotels vs. CARSALESCOM | Xenia Hotels vs. SMA Solar Technology | Xenia Hotels vs. Tradeweb Markets | Xenia Hotels vs. AECOM TECHNOLOGY |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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