Correlation Between Silicon Motion and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Silicon Motion 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 Silicon Motion and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and Xenia Hotels Resorts, you can compare the effects of market volatilities on Silicon Motion 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 Silicon Motion with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Xenia Hotels.
Diversification Opportunities for Silicon Motion and Xenia Hotels
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Xenia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology 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 Silicon Motion 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 Silicon Motion Technology 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 Silicon Motion i.e., Silicon Motion and Xenia Hotels go up and down completely randomly.
Pair Corralation between Silicon Motion and Xenia Hotels
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Xenia Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Motion Technology is 1.02 times less risky than Xenia Hotels. The stock trades about -0.19 of its potential returns per unit of risk. The Xenia Hotels Resorts is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,438 in Xenia Hotels Resorts on October 28, 2024 and sell it today you would lose (28.00) from holding Xenia Hotels Resorts or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Xenia Hotels Resorts
Performance |
| Timeline |
| Silicon Motion Technology |
| Xenia Hotels Resorts |
Silicon Motion and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Xenia Hotels
The main advantage of trading using opposite Silicon Motion and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion 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.| Silicon Motion vs. Allegheny Technologies Incorporated | Silicon Motion vs. AAC TECHNOLOGHLDGADR | Silicon Motion vs. GLG LIFE TECH | Silicon Motion vs. VELA TECHNOLPLC LS 0001 |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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