Correlation Between Hotel Property and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Flagship Investments 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 Flagship Investments 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 Flagship Investments, you can compare the effects of market volatilities on Hotel Property and Flagship Investments 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Flagship Investments.
Diversification Opportunities for Hotel Property and Flagship Investments
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and Flagship is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Hotel Property i.e., Hotel Property and Flagship Investments go up and down completely randomly.
Pair Corralation between Hotel Property and Flagship Investments
Assuming the 90 days trading horizon Hotel Property is expected to generate 1.18 times less return on investment than Flagship Investments. But when comparing it to its historical volatility, Hotel Property Investments is 1.0 times less risky than Flagship Investments. It trades about 0.02 of its potential returns per unit of risk. Flagship Investments is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Flagship Investments on August 26, 2024 and sell it today you would earn a total of 30.00 from holding Flagship Investments or generate 17.14% 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. Flagship Investments
Performance |
| Timeline |
| Hotel Property Inves |
| Flagship Investments |
Hotel Property and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Flagship Investments
The main advantage of trading using opposite Hotel Property and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Flagship Investments 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| Hotel Property vs. Mayfield Childcare | Hotel Property vs. Aurelia Metals | Hotel Property vs. EVE Health Group | Hotel Property vs. Oneview Healthcare PLC |
| Flagship Investments vs. Advanced Braking Technology | Flagship Investments vs. Neurotech International | Flagship Investments vs. Lendlease Group | Flagship Investments vs. Energy Technologies Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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