Correlation Between Hotel Property and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Falcon Metals 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 Hotel Property and Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Property Investments and Falcon Metals, you can compare the effects of market volatilities on Hotel Property and Falcon Metals 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 Hotel Property with a short position of Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Falcon Metals.
Diversification Opportunities for Hotel Property and Falcon Metals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and Falcon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and Hotel Property 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 Hotel Property Investments are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Hotel Property i.e., Hotel Property and Falcon Metals go up and down completely randomly.
Pair Corralation between Hotel Property and Falcon Metals
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 0.15 times more return on investment than Falcon Metals. However, Hotel Property Investments is 6.77 times less risky than Falcon Metals. It trades about 0.33 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.02 per unit of risk. If you would invest 361.00 in Hotel Property Investments on September 13, 2024 and sell it today you would earn a total of 17.00 from holding Hotel Property Investments or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Property Investments vs. Falcon Metals
Performance |
| Timeline |
| Hotel Property Inves |
| Falcon Metals |
Hotel Property and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Falcon Metals
The main advantage of trading using opposite Hotel Property and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Hotel Property vs. Scentre Group | Hotel Property vs. Vicinity Centres Re | Hotel Property vs. Charter Hall Retail | Hotel Property vs. Cromwell Property Group |
| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Sandfire Resources NL |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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