Correlation Between American Healthcare and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both American Healthcare 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 American Healthcare and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Healthcare REIT, and Xenia Hotels Resorts, you can compare the effects of market volatilities on American Healthcare 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 American Healthcare with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Xenia Hotels.
Diversification Opportunities for American Healthcare and Xenia Hotels
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Xenia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, 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 American Healthcare 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 American Healthcare REIT, 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 American Healthcare i.e., American Healthcare and Xenia Hotels go up and down completely randomly.
Pair Corralation between American Healthcare and Xenia Hotels
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 1.08 times more return on investment than Xenia Hotels. However, American Healthcare is 1.08 times more volatile than Xenia Hotels Resorts. It trades about 0.22 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.12 per unit of risk. If you would invest 2,596 in American Healthcare REIT, on August 27, 2024 and sell it today you would earn a total of 262.00 from holding American Healthcare REIT, or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Healthcare REIT, vs. Xenia Hotels Resorts
Performance |
| Timeline |
| American Healthcare REIT, |
| Xenia Hotels Resorts |
American Healthcare and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Xenia Hotels
The main advantage of trading using opposite American Healthcare and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare 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.| American Healthcare vs. Marfrig Global Foods | American Healthcare vs. Custom Truck One | American Healthcare vs. Lendlease Global Commercial | American Healthcare vs. Fortress Transp Infra |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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