Correlation Between City Lodge and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both City Lodge and Trematon Capital 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 City Lodge and Trematon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Trematon Capital Investments, you can compare the effects of market volatilities on City Lodge and Trematon Capital 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 City Lodge with a short position of Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Trematon Capital.
Diversification Opportunities for City Lodge and Trematon Capital
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Trematon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv and City Lodge 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 City Lodge Hotels are associated (or correlated) with Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of City Lodge i.e., City Lodge and Trematon Capital go up and down completely randomly.
Pair Corralation between City Lodge and Trematon Capital
Assuming the 90 days trading horizon City Lodge is expected to generate 57.04 times less return on investment than Trematon Capital. But when comparing it to its historical volatility, City Lodge Hotels is 2.0 times less risky than Trematon Capital. It trades about 0.01 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 23,600 in Trematon Capital Investments on August 27, 2024 and sell it today you would earn a total of 1,900 from holding Trematon Capital Investments or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
City Lodge Hotels vs. Trematon Capital Investments
Performance |
| Timeline |
| City Lodge Hotels |
| Trematon Capital Inv |
City Lodge and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Lodge and Trematon Capital
The main advantage of trading using opposite City Lodge and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| City Lodge vs. Prosus NV | City Lodge vs. Compagnie Financire Richemont | City Lodge vs. British American Tobacco | City Lodge vs. Glencore PLC |
| Trematon Capital vs. Lighthouse Capital | Trematon Capital vs. Centaur Bci Balanced | Trematon Capital vs. Sabvest Capital | Trematon Capital vs. Growthpoint Properties |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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