Correlation Between Everyday People and American Hotel
Can any of the company-specific risk be diversified away by investing in both Everyday People 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 Everyday People and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everyday People Financial and American Hotel Income, you can compare the effects of market volatilities on Everyday People 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 Everyday People with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everyday People and American Hotel.
Diversification Opportunities for Everyday People and American Hotel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Everyday and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Everyday People Financial 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 Everyday People 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 Everyday People Financial 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 Everyday People i.e., Everyday People and American Hotel go up and down completely randomly.
Pair Corralation between Everyday People and American Hotel
Assuming the 90 days horizon Everyday People Financial is expected to generate 1.37 times more return on investment than American Hotel. However, Everyday People is 1.37 times more volatile than American Hotel Income. It trades about 0.05 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.35 per unit of risk. If you would invest 38.00 in Everyday People Financial on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Everyday People Financial or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everyday People Financial vs. American Hotel Income
Performance |
| Timeline |
| Everyday People Financial |
| American Hotel Income |
Everyday People and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everyday People and American Hotel
The main advantage of trading using opposite Everyday People and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everyday People 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.| Everyday People vs. Bip Investment Corp | Everyday People vs. Datable Technology Corp | Everyday People vs. Diversified Royalty Corp | Everyday People vs. Precious Metals And |
| American Hotel vs. Algonquin Power Utilities | American Hotel vs. Electra Battery Materials | American Hotel vs. Brookfield Office Properties | American Hotel vs. HOME DEPOT CDR |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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