Correlation Between Hoteles City and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Hoteles City and SPDR Dow 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 SPDR Dow 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 SPDR Dow Jones, you can compare the effects of market volatilities on Hoteles City and SPDR Dow 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 SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles City and SPDR Dow.
Diversification Opportunities for Hoteles City and SPDR Dow
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hoteles and SPDR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Hoteles City i.e., Hoteles City and SPDR Dow go up and down completely randomly.
Pair Corralation between Hoteles City and SPDR Dow
Assuming the 90 days trading horizon Hoteles City Express is expected to under-perform the SPDR Dow. In addition to that, Hoteles City is 1.17 times more volatile than SPDR Dow Jones. It trades about -0.04 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.27 per unit of volatility. If you would invest 854,700 in SPDR Dow Jones on September 2, 2024 and sell it today you would earn a total of 75,300 from holding SPDR Dow Jones or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Hoteles City Express vs. SPDR Dow Jones
Performance |
| Timeline |
| Hoteles City Express |
| SPDR Dow Jones |
Hoteles City and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoteles City and SPDR Dow
The main advantage of trading using opposite Hoteles City and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoteles City position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| Hoteles City vs. CEMEX SAB de | Hoteles City vs. Grupo Financiero Banorte | Hoteles City vs. Grupo Bimbo SAB | Hoteles City vs. Fomento Econmico Mexicano |
| SPDR Dow vs. Promotora y Operadora | SPDR Dow vs. UnitedHealth Group Incorporated | SPDR Dow vs. Qulitas Controladora SAB | SPDR Dow 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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