Correlation Between American Hotel and Highway 50
Can any of the company-specific risk be diversified away by investing in both American Hotel and Highway 50 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 Highway 50 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 Highway 50 Gold, you can compare the effects of market volatilities on American Hotel and Highway 50 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 Highway 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Highway 50.
Diversification Opportunities for American Hotel and Highway 50
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Highway is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Highway 50 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway 50 Gold 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 Highway 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway 50 Gold has no effect on the direction of American Hotel i.e., American Hotel and Highway 50 go up and down completely randomly.
Pair Corralation between American Hotel and Highway 50
Assuming the 90 days trading horizon American Hotel Income is expected to generate 0.58 times more return on investment than Highway 50. However, American Hotel Income is 1.72 times less risky than Highway 50. It trades about -0.44 of its potential returns per unit of risk. Highway 50 Gold is currently generating about -0.27 per unit of risk. If you would invest 44.00 in American Hotel Income on September 13, 2024 and sell it today you would lose (10.00) from holding American Hotel Income or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Highway 50 Gold
Performance |
| Timeline |
| American Hotel Income |
| Highway 50 Gold |
American Hotel and Highway 50 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Highway 50
The main advantage of trading using opposite American Hotel and Highway 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Highway 50 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 Highway 50 will offset losses from the drop in Highway 50's long position.| American Hotel vs. Canadian Apartment Properties | American Hotel vs. Granite Real Estate | American Hotel vs. Choice Properties Real | American Hotel vs. HR Real Estate |
| Highway 50 vs. Atrium Mortgage Investment | Highway 50 vs. Bip Investment Corp | Highway 50 vs. Faction Investment Group | Highway 50 vs. American Hotel Income |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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