Correlation Between American Hotel and Emerge Commerce
Can any of the company-specific risk be diversified away by investing in both American Hotel and Emerge Commerce 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 Emerge Commerce 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 Emerge Commerce, you can compare the effects of market volatilities on American Hotel and Emerge Commerce 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 Emerge Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Emerge Commerce.
Diversification Opportunities for American Hotel and Emerge Commerce
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Emerge is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Emerge Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerge Commerce 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 Emerge Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerge Commerce has no effect on the direction of American Hotel i.e., American Hotel and Emerge Commerce go up and down completely randomly.
Pair Corralation between American Hotel and Emerge Commerce
Assuming the 90 days trading horizon American Hotel is expected to generate 1.76 times less return on investment than Emerge Commerce. But when comparing it to its historical volatility, American Hotel Income is 2.05 times less risky than Emerge Commerce. It trades about 0.18 of its potential returns per unit of risk. Emerge Commerce is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Emerge Commerce on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Emerge Commerce or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Emerge Commerce
Performance |
| Timeline |
| American Hotel Income |
| Emerge Commerce |
American Hotel and Emerge Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Emerge Commerce
The main advantage of trading using opposite American Hotel and Emerge Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Emerge Commerce 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 Emerge Commerce will offset losses from the drop in Emerge Commerce's long position.| American Hotel vs. East Side Games | American Hotel vs. Evertz Technologies Limited | American Hotel vs. Champion Gaming Group | American Hotel vs. Micron Technology, |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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