Correlation Between Advent Wireless and American Hotel
Can any of the company-specific risk be diversified away by investing in both Advent Wireless and American Hotel 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 Advent Wireless and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Wireless and American Hotel Income, you can compare the effects of market volatilities on Advent Wireless and American Hotel 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 Advent Wireless with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Wireless and American Hotel.
Diversification Opportunities for Advent Wireless and American Hotel
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advent and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Advent Wireless 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 Advent Wireless are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Advent Wireless i.e., Advent Wireless and American Hotel go up and down completely randomly.
Pair Corralation between Advent Wireless and American Hotel
Assuming the 90 days horizon Advent Wireless is expected to generate 0.63 times more return on investment than American Hotel. However, Advent Wireless is 1.58 times less risky than American Hotel. It trades about 0.03 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.05 per unit of risk. If you would invest 65.00 in Advent Wireless on September 19, 2024 and sell it today you would earn a total of 0.00 from holding Advent Wireless or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Wireless vs. American Hotel Income
Performance |
| Timeline |
| Advent Wireless |
| American Hotel Income |
Advent Wireless and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Wireless and American Hotel
The main advantage of trading using opposite Advent Wireless and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Wireless position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| Advent Wireless vs. High Liner Foods | Advent Wireless vs. Richelieu Hardware | Advent Wireless vs. Toromont Industries | Advent Wireless vs. iShares Canadian HYBrid |
| American Hotel vs. Advent Wireless | American Hotel vs. Lion One Metals | American Hotel vs. CNJ Capital Investments | American Hotel vs. North American Construction |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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