Correlation Between ACCOR SPADR and Regal Hotels
Can any of the company-specific risk be diversified away by investing in both ACCOR SPADR and Regal 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 ACCOR SPADR and Regal Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACCOR SPADR NEW and Regal Hotels International, you can compare the effects of market volatilities on ACCOR SPADR and Regal 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 ACCOR SPADR with a short position of Regal Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACCOR SPADR and Regal Hotels.
Diversification Opportunities for ACCOR SPADR and Regal Hotels
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ACCOR and Regal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ACCOR SPADR NEW and Regal Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Hotels Interna and ACCOR SPADR 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 ACCOR SPADR NEW are associated (or correlated) with Regal Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Hotels Interna has no effect on the direction of ACCOR SPADR i.e., ACCOR SPADR and Regal Hotels go up and down completely randomly.
Pair Corralation between ACCOR SPADR and Regal Hotels
Assuming the 90 days trading horizon ACCOR SPADR is expected to generate 1.23 times less return on investment than Regal Hotels. But when comparing it to its historical volatility, ACCOR SPADR NEW is 1.49 times less risky than Regal Hotels. It trades about 0.12 of its potential returns per unit of risk. Regal Hotels International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Regal Hotels International on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Regal Hotels International or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACCOR SPADR NEW vs. Regal Hotels International
Performance |
| Timeline |
| ACCOR SPADR NEW |
| Regal Hotels Interna |
ACCOR SPADR and Regal Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACCOR SPADR and Regal Hotels
The main advantage of trading using opposite ACCOR SPADR and Regal Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACCOR SPADR position performs unexpectedly, Regal 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 Regal Hotels will offset losses from the drop in Regal Hotels' long position.The idea behind ACCOR SPADR NEW and Regal Hotels International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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