Correlation Between Canadian Apartment and American Hotel
Can any of the company-specific risk be diversified away by investing in both Canadian Apartment 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 Canadian Apartment and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Apartment Properties and American Hotel Income, you can compare the effects of market volatilities on Canadian Apartment 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 Canadian Apartment with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Apartment and American Hotel.
Diversification Opportunities for Canadian Apartment and American Hotel
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Apartment Properties 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 Canadian Apartment 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 Canadian Apartment Properties 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 Canadian Apartment i.e., Canadian Apartment and American Hotel go up and down completely randomly.
Pair Corralation between Canadian Apartment and American Hotel
Assuming the 90 days trading horizon Canadian Apartment Properties is expected to generate 0.43 times more return on investment than American Hotel. However, Canadian Apartment Properties is 2.34 times less risky than American Hotel. It trades about -0.07 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.44 per unit of risk. If you would invest 4,509 in Canadian Apartment Properties on September 13, 2024 and sell it today you would lose (77.00) from holding Canadian Apartment Properties or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Apartment Properties vs. American Hotel Income
Performance |
| Timeline |
| Canadian Apartment |
| American Hotel Income |
Canadian Apartment and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Apartment and American Hotel
The main advantage of trading using opposite Canadian Apartment and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Apartment 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.| Canadian Apartment vs. Allied Properties Real | Canadian Apartment vs. Granite Real Estate | Canadian Apartment vs. Boardwalk Real Estate | Canadian Apartment vs. HR Real Estate |
| American Hotel vs. Canadian Apartment Properties | American Hotel vs. Granite Real Estate | American Hotel vs. Choice Properties Real | American Hotel vs. HR Real Estate |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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