Correlation Between Rea and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Rea and Hotel Property 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 Rea and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rea Group and Hotel Property Investments, you can compare the effects of market volatilities on Rea and Hotel Property 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 Rea with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rea and Hotel Property.
Diversification Opportunities for Rea and Hotel Property
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Rea and Hotel is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Rea Group and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and Rea 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 Rea Group are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of Rea i.e., Rea and Hotel Property go up and down completely randomly.
Pair Corralation between Rea and Hotel Property
Assuming the 90 days trading horizon Rea Group is expected to generate 1.2 times more return on investment than Hotel Property. However, Rea is 1.2 times more volatile than Hotel Property Investments. It trades about 0.13 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.08 per unit of risk. If you would invest 20,769 in Rea Group on November 2, 2024 and sell it today you would earn a total of 4,151 from holding Rea Group or generate 19.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.05% |
| Values | Daily Returns |
Rea Group vs. Hotel Property Investments
Performance |
| Timeline |
| Rea Group |
| Hotel Property Inves |
Rea and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rea and Hotel Property
The main advantage of trading using opposite Rea and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rea position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property's long position.| Rea vs. My Foodie Box | Rea vs. Land Homes Group | Rea vs. Finexia Financial Group | Rea vs. Sequoia Financial Group |
| Hotel Property vs. Super Retail Group | Hotel Property vs. Macquarie Technology Group | Hotel Property vs. Technology One | Hotel Property vs. Iron Road |
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.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |