Correlation Between JAPAN AIRLINES and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and BRAEMAR 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 JAPAN AIRLINES and BRAEMAR HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and BRAEMAR HOTELS RES, you can compare the effects of market volatilities on JAPAN AIRLINES and BRAEMAR 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 JAPAN AIRLINES with a short position of BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and BRAEMAR HOTELS.
Diversification Opportunities for JAPAN AIRLINES and BRAEMAR HOTELS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JAPAN and BRAEMAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and JAPAN AIRLINES 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 JAPAN AIRLINES are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and BRAEMAR HOTELS
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the BRAEMAR HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 4.49 times less risky than BRAEMAR HOTELS. The stock trades about -0.05 of its potential returns per unit of risk. The BRAEMAR HOTELS RES is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 214.00 in BRAEMAR HOTELS RES on October 12, 2024 and sell it today you would earn a total of 66.00 from holding BRAEMAR HOTELS RES or generate 30.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| JAPAN AIRLINES |
| BRAEMAR HOTELS RES |
JAPAN AIRLINES and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and BRAEMAR HOTELS
The main advantage of trading using opposite JAPAN AIRLINES and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES position performs unexpectedly, BRAEMAR 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 BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS's long position.| JAPAN AIRLINES vs. National Beverage Corp | JAPAN AIRLINES vs. INDOFOOD AGRI RES | JAPAN AIRLINES vs. GRIFFIN MINING LTD | JAPAN AIRLINES vs. VIVA WINE GROUP |
| BRAEMAR HOTELS vs. Hua Hong Semiconductor | BRAEMAR HOTELS vs. DEVRY EDUCATION GRP | BRAEMAR HOTELS vs. TAL Education Group | BRAEMAR HOTELS vs. TOREX SEMICONDUCTOR LTD |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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