Correlation Between Hoteles City and Baxter International
Can any of the company-specific risk be diversified away by investing in both Hoteles City and Baxter International 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 Hoteles City and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoteles City Express and Baxter International, you can compare the effects of market volatilities on Hoteles City and Baxter International 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 Hoteles City with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles City and Baxter International.
Diversification Opportunities for Hoteles City and Baxter International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hoteles and Baxter is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and Hoteles City 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 Hoteles City Express are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Hoteles City i.e., Hoteles City and Baxter International go up and down completely randomly.
Pair Corralation between Hoteles City and Baxter International
Assuming the 90 days trading horizon Hoteles City Express is expected to generate 1.26 times more return on investment than Baxter International. However, Hoteles City is 1.26 times more volatile than Baxter International. It trades about -0.07 of its potential returns per unit of risk. Baxter International is currently generating about -0.21 per unit of risk. If you would invest 475.00 in Hoteles City Express on October 11, 2024 and sell it today you would lose (30.00) from holding Hoteles City Express or give up 6.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Hoteles City Express vs. Baxter International
Performance |
| Timeline |
| Hoteles City Express |
| Baxter International |
Hoteles City and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoteles City and Baxter International
The main advantage of trading using opposite Hoteles City and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoteles City position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Hoteles City vs. Controladora Vuela Compaa | Hoteles City vs. Alsea SAB de | Hoteles City vs. Nemak S A | Hoteles City vs. Grupo Comercial Chedraui |
| Baxter International vs. Grupo Carso SAB | Baxter International vs. First Majestic Silver | Baxter International vs. Verizon Communications | Baxter International vs. Hoteles City Express |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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