Correlation Between Hotel Property and Toys R
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Toys R 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 Toys R 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 Toys R Us, you can compare the effects of market volatilities on Hotel Property and Toys R 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 Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Toys R.
Diversification Opportunities for Hotel Property and Toys R
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and Toys is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us 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 Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of Hotel Property i.e., Hotel Property and Toys R go up and down completely randomly.
Pair Corralation between Hotel Property and Toys R
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 0.24 times more return on investment than Toys R. However, Hotel Property Investments is 4.12 times less risky than Toys R. It trades about 0.09 of its potential returns per unit of risk. Toys R Us is currently generating about -0.04 per unit of risk. If you would invest 316.00 in Hotel Property Investments on September 1, 2024 and sell it today you would earn a total of 54.00 from holding Hotel Property Investments or generate 17.09% 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. Toys R Us
Performance |
| Timeline |
| Hotel Property Inves |
| Toys R Us |
Hotel Property and Toys R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Toys R
The main advantage of trading using opposite Hotel Property and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R's long position.| Hotel Property vs. Queste Communications | Hotel Property vs. Super Retail Group | Hotel Property vs. Retail Food Group | Hotel Property vs. Spirit Telecom |
| Toys R vs. iShares Global Healthcare | Toys R vs. Australian Dairy Farms | Toys R vs. Adriatic Metals Plc | Toys R vs. Australian Agricultural |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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