Correlation Between Retail Food and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Retail Food 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 Retail Food and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Hotel Property Investments, you can compare the effects of market volatilities on Retail Food 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 Retail Food with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Hotel Property.
Diversification Opportunities for Retail Food and Hotel Property
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Hotel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food 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 Retail Food 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 Retail Food 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 Retail Food i.e., Retail Food and Hotel Property go up and down completely randomly.
Pair Corralation between Retail Food and Hotel Property
Assuming the 90 days trading horizon Retail Food Group is expected to generate 4.33 times more return on investment than Hotel Property. However, Retail Food is 4.33 times more volatile than Hotel Property Investments. It trades about 0.15 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.45 per unit of risk. If you would invest 6.70 in Retail Food Group on August 30, 2024 and sell it today you would earn a total of 0.60 from holding Retail Food Group or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Retail Food Group vs. Hotel Property Investments
Performance |
| Timeline |
| Retail Food Group |
| Hotel Property Inves |
Retail Food and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Hotel Property
The main advantage of trading using opposite Retail Food and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food 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.| Retail Food vs. Pinnacle Investment Management | Retail Food vs. Oceania Healthcare | Retail Food vs. Red Hill Iron | Retail Food vs. Centaurus Metals |
| Hotel Property vs. Bluescope Steel | Hotel Property vs. Seven West Media | Hotel Property vs. Super Retail Group | Hotel Property vs. Vulcan Steel |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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