Correlation Between BRIT AMER and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Xenia Hotels Resorts, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Xenia Hotels.
Diversification Opportunities for BRIT AMER and Xenia Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIT and Xenia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO 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 BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and Xenia Hotels go up and down completely randomly.
Pair Corralation between BRIT AMER and Xenia Hotels
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.58 times more return on investment than Xenia Hotels. However, BRIT AMER TOBACCO is 1.73 times less risky than Xenia Hotels. It trades about 0.25 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.11 per unit of risk. If you would invest 3,166 in BRIT AMER TOBACCO on November 3, 2024 and sell it today you would earn a total of 656.00 from holding BRIT AMER TOBACCO or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Xenia Hotels Resorts
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Xenia Hotels Resorts |
BRIT AMER and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Xenia Hotels
The main advantage of trading using opposite BRIT AMER and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. Caseys General Stores | BRIT AMER vs. Gaztransport Technigaz SA | BRIT AMER vs. TEXAS ROADHOUSE | BRIT AMER vs. SAFEROADS HLDGS |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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