Correlation Between Direct Capital and Netz Hotels
Can any of the company-specific risk be diversified away by investing in both Direct Capital and Netz 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 Direct Capital and Netz Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Capital Investments and Netz Hotels, you can compare the effects of market volatilities on Direct Capital and Netz 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 Direct Capital with a short position of Netz Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Capital and Netz Hotels.
Diversification Opportunities for Direct Capital and Netz Hotels
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direct and Netz is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Direct Capital Investments and Netz Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netz Hotels and Direct Capital 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 Direct Capital Investments are associated (or correlated) with Netz Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netz Hotels has no effect on the direction of Direct Capital i.e., Direct Capital and Netz Hotels go up and down completely randomly.
Pair Corralation between Direct Capital and Netz Hotels
Assuming the 90 days trading horizon Direct Capital Investments is expected to generate 10.69 times more return on investment than Netz Hotels. However, Direct Capital is 10.69 times more volatile than Netz Hotels. It trades about 0.09 of its potential returns per unit of risk. Netz Hotels is currently generating about 0.03 per unit of risk. If you would invest 7,050 in Direct Capital Investments on August 25, 2024 and sell it today you would earn a total of 86,650 from holding Direct Capital Investments or generate 1229.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Capital Investments vs. Netz Hotels
Performance |
| Timeline |
| Direct Capital Inves |
| Netz Hotels |
Direct Capital and Netz Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Capital and Netz Hotels
The main advantage of trading using opposite Direct Capital and Netz Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Capital position performs unexpectedly, Netz 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 Netz Hotels will offset losses from the drop in Netz Hotels' long position.| Direct Capital vs. Nice | Direct Capital vs. The Gold Bond | Direct Capital vs. Bank Leumi Le Israel | Direct Capital vs. ICL Israel Chemicals |
| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Brainsway | Netz Hotels vs. Mivne Real Estate | Netz Hotels vs. Photomyne |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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