Correlation Between Essex Property and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both Essex Property and PPHE 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 Essex Property and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essex Property Trust and PPHE HOTEL GROUP, you can compare the effects of market volatilities on Essex Property and PPHE 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 Essex Property with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essex Property and PPHE HOTEL.
Diversification Opportunities for Essex Property and PPHE HOTEL
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essex and PPHE is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Essex Property Trust and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and Essex Property 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 Essex Property Trust are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Essex Property i.e., Essex Property and PPHE HOTEL go up and down completely randomly.
Pair Corralation between Essex Property and PPHE HOTEL
Assuming the 90 days horizon Essex Property Trust is expected to generate 0.81 times more return on investment than PPHE HOTEL. However, Essex Property Trust is 1.23 times less risky than PPHE HOTEL. It trades about 0.1 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.07 per unit of risk. If you would invest 18,459 in Essex Property Trust on October 11, 2024 and sell it today you would earn a total of 7,931 from holding Essex Property Trust or generate 42.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essex Property Trust vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| Essex Property Trust |
| PPHE HOTEL GROUP |
Essex Property and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essex Property and PPHE HOTEL
The main advantage of trading using opposite Essex Property and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essex Property position performs unexpectedly, PPHE 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| Essex Property vs. PPHE HOTEL GROUP | Essex Property vs. MELIA HOTELS | Essex Property vs. Dalata Hotel Group | Essex Property vs. Osisko Metals |
| PPHE HOTEL vs. RYANAIR HLDGS ADR | PPHE HOTEL vs. Altair Engineering | PPHE HOTEL vs. CHINA SOUTHN AIR H | PPHE HOTEL vs. United Insurance Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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