Correlation Between Crombie Real and American Hotel
Can any of the company-specific risk be diversified away by investing in both Crombie Real 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 Crombie Real and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crombie Real Estate and American Hotel Income, you can compare the effects of market volatilities on Crombie Real 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 Crombie Real with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crombie Real and American Hotel.
Diversification Opportunities for Crombie Real and American Hotel
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crombie and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate 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 Crombie Real 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 Crombie Real Estate 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 Crombie Real i.e., Crombie Real and American Hotel go up and down completely randomly.
Pair Corralation between Crombie Real and American Hotel
Assuming the 90 days trading horizon Crombie Real Estate is expected to generate 0.38 times more return on investment than American Hotel. However, Crombie Real Estate is 2.6 times less risky than American Hotel. It trades about -0.23 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.41 per unit of risk. If you would invest 1,534 in Crombie Real Estate on September 13, 2024 and sell it today you would lose (122.00) from holding Crombie Real Estate or give up 7.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crombie Real Estate vs. American Hotel Income
Performance |
| Timeline |
| Crombie Real Estate |
| American Hotel Income |
Crombie Real and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crombie Real and American Hotel
The main advantage of trading using opposite Crombie Real and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crombie Real 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.| Crombie Real vs. Artis Real Estate | Crombie Real vs. Choice Properties Real | Crombie Real vs. Killam Apartment Real | Crombie Real vs. Boardwalk 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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