Correlation Between DEUTSCHE WOHNEN and Host Hotels
Can any of the company-specific risk be diversified away by investing in both DEUTSCHE WOHNEN and Host 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 DEUTSCHE WOHNEN and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEUTSCHE WOHNEN ADRS12 and Host Hotels Resorts, you can compare the effects of market volatilities on DEUTSCHE WOHNEN and Host 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 DEUTSCHE WOHNEN with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE WOHNEN and Host Hotels.
Diversification Opportunities for DEUTSCHE WOHNEN and Host Hotels
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DEUTSCHE and Host is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE WOHNEN ADRS12 and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12 are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of DEUTSCHE WOHNEN i.e., DEUTSCHE WOHNEN and Host Hotels go up and down completely randomly.
Pair Corralation between DEUTSCHE WOHNEN and Host Hotels
Assuming the 90 days trading horizon DEUTSCHE WOHNEN is expected to generate 24.22 times less return on investment than Host Hotels. In addition to that, DEUTSCHE WOHNEN is 1.19 times more volatile than Host Hotels Resorts. It trades about 0.0 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.09 per unit of volatility. If you would invest 1,610 in Host Hotels Resorts on September 26, 2024 and sell it today you would earn a total of 120.00 from holding Host Hotels Resorts or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DEUTSCHE WOHNEN ADRS12 vs. Host Hotels Resorts
Performance |
| Timeline |
| DEUTSCHE WOHNEN ADRS12 |
| Host Hotels Resorts |
DEUTSCHE WOHNEN and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEUTSCHE WOHNEN and Host Hotels
The main advantage of trading using opposite DEUTSCHE WOHNEN and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEUTSCHE WOHNEN position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| DEUTSCHE WOHNEN vs. Host Hotels Resorts | DEUTSCHE WOHNEN vs. Aegean Airlines SA | DEUTSCHE WOHNEN vs. Sunstone Hotel Investors | DEUTSCHE WOHNEN vs. Meli Hotels International |
| Host Hotels vs. Ryman Hospitality Properties | Host Hotels vs. Park Hotels Resorts | Host Hotels vs. Pebblebrook Hotel Trust | Host Hotels vs. Sunstone Hotel Investors |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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