Correlation Between AIR PRODCHEMICALS and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Xenia Hotels Resorts, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Xenia Hotels.
Diversification Opportunities for AIR PRODCHEMICALS and Xenia Hotels
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIR and Xenia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Xenia Hotels go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Xenia Hotels
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.88 times more return on investment than Xenia Hotels. However, AIR PRODCHEMICALS is 1.14 times less risky than Xenia Hotels. It trades about 0.02 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.01 per unit of risk. If you would invest 28,781 in AIR PRODCHEMICALS on September 3, 2024 and sell it today you would earn a total of 2,849 from holding AIR PRODCHEMICALS or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Xenia Hotels Resorts
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Xenia Hotels Resorts |
AIR PRODCHEMICALS and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Xenia Hotels
The main advantage of trading using opposite AIR PRODCHEMICALS and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. Tsingtao Brewery | AIR PRODCHEMICALS vs. Broadwind | AIR PRODCHEMICALS vs. National Beverage Corp | AIR PRODCHEMICALS vs. United Breweries Co |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Ryman Hospitality Properties | Xenia Hotels vs. Park Hotels Resorts | Xenia Hotels 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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