Correlation Between American Hotel and Granite Real
Can any of the company-specific risk be diversified away by investing in both American Hotel and Granite Real 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 Granite Real 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 Granite Real Estate, you can compare the effects of market volatilities on American Hotel and Granite Real 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 Granite Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Granite Real.
Diversification Opportunities for American Hotel and Granite Real
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Granite is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Granite Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Real Estate 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 Granite Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Real Estate has no effect on the direction of American Hotel i.e., American Hotel and Granite Real go up and down completely randomly.
Pair Corralation between American Hotel and Granite Real
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Granite Real. In addition to that, American Hotel is 11.51 times more volatile than Granite Real Estate. It trades about -0.03 of its total potential returns per unit of risk. Granite Real Estate is currently generating about -0.16 per unit of volatility. If you would invest 7,395 in Granite Real Estate on September 20, 2024 and sell it today you would lose (277.00) from holding Granite Real Estate or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Granite Real Estate
Performance |
| Timeline |
| American Hotel Income |
| Granite Real Estate |
American Hotel and Granite Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Granite Real
The main advantage of trading using opposite American Hotel and Granite Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Granite Real 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 Granite Real will offset losses from the drop in Granite Real's long position.| American Hotel vs. Granite Real Estate | American Hotel vs. Choice Properties Real | American Hotel vs. HR Real Estate |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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