Correlation Between INTERCONT HOTELS and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Xenia Hotels 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 INTERCONT HOTELS and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Xenia Hotels Resorts, you can compare the effects of market volatilities on INTERCONT HOTELS and Xenia Hotels 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 INTERCONT HOTELS with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Xenia Hotels.
Diversification Opportunities for INTERCONT HOTELS and Xenia Hotels
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INTERCONT and Xenia is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and INTERCONT HOTELS 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 INTERCONT HOTELS are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Xenia Hotels go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and Xenia Hotels
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 1.09 times more return on investment than Xenia Hotels. However, INTERCONT HOTELS is 1.09 times more volatile than Xenia Hotels Resorts. It trades about 0.25 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.15 per unit of risk. If you would invest 10,200 in INTERCONT HOTELS on August 31, 2024 and sell it today you would earn a total of 1,600 from holding INTERCONT HOTELS or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. Xenia Hotels Resorts
Performance |
| Timeline |
| INTERCONT HOTELS |
| Xenia Hotels Resorts |
INTERCONT HOTELS and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and Xenia Hotels
The main advantage of trading using opposite INTERCONT HOTELS and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Xenia Hotels 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.The idea behind INTERCONT HOTELS and Xenia Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Xenia Hotels vs. Park Hotels Resorts | Xenia Hotels vs. Pebblebrook Hotel Trust | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. ASHFORD HOSPITTRUST |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |