Correlation Between Hotel Property and Scentre
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Scentre 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 Scentre 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 Scentre Group, you can compare the effects of market volatilities on Hotel Property and Scentre 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 Scentre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Scentre.
Diversification Opportunities for Hotel Property and Scentre
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hotel and Scentre is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre Group 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 Scentre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of Hotel Property i.e., Hotel Property and Scentre go up and down completely randomly.
Pair Corralation between Hotel Property and Scentre
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 1.25 times more return on investment than Scentre. However, Hotel Property is 1.25 times more volatile than Scentre Group. It trades about 0.12 of its potential returns per unit of risk. Scentre Group is currently generating about 0.09 per unit of risk. If you would invest 336.00 in Hotel Property Investments on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Hotel Property Investments or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Property Investments vs. Scentre Group
Performance |
| Timeline |
| Hotel Property Inves |
| Scentre Group |
Hotel Property and Scentre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Scentre
The main advantage of trading using opposite Hotel Property and Scentre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Scentre 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 Scentre will offset losses from the drop in Scentre's 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 |
| Scentre vs. Mayfield Childcare | Scentre vs. Retail Food Group | Scentre vs. Autosports Group | Scentre vs. Patriot Battery Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |