Correlation Between COVIVIO HOTELS and Carsales
Can any of the company-specific risk be diversified away by investing in both COVIVIO HOTELS and Carsales 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 COVIVIO HOTELS and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COVIVIO HOTELS INH and CarsalesCom, you can compare the effects of market volatilities on COVIVIO HOTELS and Carsales 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 COVIVIO HOTELS with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of COVIVIO HOTELS and Carsales.
Diversification Opportunities for COVIVIO HOTELS and Carsales
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COVIVIO and Carsales is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and COVIVIO 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 COVIVIO HOTELS INH are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of COVIVIO HOTELS i.e., COVIVIO HOTELS and Carsales go up and down completely randomly.
Pair Corralation between COVIVIO HOTELS and Carsales
Assuming the 90 days horizon COVIVIO HOTELS INH is expected to generate 0.94 times more return on investment than Carsales. However, COVIVIO HOTELS INH is 1.07 times less risky than Carsales. It trades about 0.12 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.06 per unit of risk. If you would invest 1,449 in COVIVIO HOTELS INH on October 12, 2024 and sell it today you would earn a total of 551.00 from holding COVIVIO HOTELS INH or generate 38.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COVIVIO HOTELS INH vs. CarsalesCom
Performance |
| Timeline |
| COVIVIO HOTELS INH |
| CarsalesCom |
COVIVIO HOTELS and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COVIVIO HOTELS and Carsales
The main advantage of trading using opposite COVIVIO HOTELS and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVIVIO HOTELS position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| COVIVIO HOTELS vs. PACIFIC ONLINE | COVIVIO HOTELS vs. Global Ship Lease | COVIVIO HOTELS vs. UNITED RENTALS | COVIVIO HOTELS vs. Quaker Chemical |
| Carsales vs. MHP Hotel AG | Carsales vs. Meli Hotels International | Carsales vs. MELIA HOTELS | Carsales vs. Pebblebrook Hotel Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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