Correlation Between Invitation Homes and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Invitation Homes 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 Invitation Homes and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invitation Homes and Xenia Hotels Resorts, you can compare the effects of market volatilities on Invitation Homes 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 Invitation Homes with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invitation Homes and Xenia Hotels.
Diversification Opportunities for Invitation Homes and Xenia Hotels
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invitation and Xenia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Invitation Homes 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 Invitation Homes 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 Invitation Homes 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 Invitation Homes i.e., Invitation Homes and Xenia Hotels go up and down completely randomly.
Pair Corralation between Invitation Homes and Xenia Hotels
Given the investment horizon of 90 days Invitation Homes is expected to generate 6.54 times less return on investment than Xenia Hotels. But when comparing it to its historical volatility, Invitation Homes is 1.22 times less risky than Xenia Hotels. It trades about 0.03 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,464 in Xenia Hotels Resorts on August 27, 2024 and sell it today you would earn a total of 104.00 from holding Xenia Hotels Resorts or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invitation Homes vs. Xenia Hotels Resorts
Performance |
| Timeline |
| Invitation Homes |
| Xenia Hotels Resorts |
Invitation Homes and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invitation Homes and Xenia Hotels
The main advantage of trading using opposite Invitation Homes and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invitation Homes 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.| Invitation Homes vs. American Homes 4 | Invitation Homes vs. Mid America Apartment Communities | Invitation Homes vs. Camden Property Trust | Invitation Homes vs. Sun Communities |
| Xenia Hotels vs. RLJ Lodging Trust | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Pebblebrook Hotel Trust | Xenia Hotels vs. Summit Hotel Properties |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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