Correlation Between Graham Holdings and Service Properties
Can any of the company-specific risk be diversified away by investing in both Graham Holdings and Service Properties 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 Graham Holdings and Service Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham Holdings Co and Service Properties Trust, you can compare the effects of market volatilities on Graham Holdings and Service Properties 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 Graham Holdings with a short position of Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Service Properties.
Diversification Opportunities for Graham Holdings and Service Properties
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Graham and Service is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Graham Holdings i.e., Graham Holdings and Service Properties go up and down completely randomly.
Pair Corralation between Graham Holdings and Service Properties
Considering the 90-day investment horizon Graham Holdings is expected to generate 3.01 times less return on investment than Service Properties. But when comparing it to its historical volatility, Graham Holdings Co is 1.53 times less risky than Service Properties. It trades about 0.1 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 246.00 in Service Properties Trust on October 25, 2024 and sell it today you would earn a total of 19.00 from holding Service Properties Trust or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham Holdings Co vs. Service Properties Trust
Performance |
| Timeline |
| Graham Holdings |
| Service Properties Trust |
Graham Holdings and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham Holdings and Service Properties
The main advantage of trading using opposite Graham Holdings and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' long position.| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Madison Square Garden |
| Service Properties vs. Nasdaq Inc | Service Properties vs. Infosys Ltd ADR | Service Properties vs. Zhihu Inc ADR | Service Properties vs. Cheche Group Class |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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