Correlation Between American Hotel and Advent Wireless
Can any of the company-specific risk be diversified away by investing in both American Hotel and Advent Wireless 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 American Hotel and Advent Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Advent Wireless, you can compare the effects of market volatilities on American Hotel and Advent Wireless 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 American Hotel with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Advent Wireless.
Diversification Opportunities for American Hotel and Advent Wireless
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Advent is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and American Hotel 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 American Hotel Income are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of American Hotel i.e., American Hotel and Advent Wireless go up and down completely randomly.
Pair Corralation between American Hotel and Advent Wireless
Assuming the 90 days trading horizon American Hotel Income is expected to generate 2.61 times more return on investment than Advent Wireless. However, American Hotel is 2.61 times more volatile than Advent Wireless. It trades about -0.03 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.21 per unit of risk. If you would invest 43.00 in American Hotel Income on September 19, 2024 and sell it today you would lose (9.00) from holding American Hotel Income or give up 20.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Advent Wireless
Performance |
| Timeline |
| American Hotel Income |
| Advent Wireless |
American Hotel and Advent Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Advent Wireless
The main advantage of trading using opposite American Hotel and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Advent Wireless 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 Advent Wireless will offset losses from the drop in Advent Wireless' long position.| American Hotel vs. Advent Wireless | American Hotel vs. Lion One Metals | American Hotel vs. CNJ Capital Investments | American Hotel vs. North American Construction |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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