Correlation Between ATT and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Xenia Hotels Resorts, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Xenia Hotels.
Diversification Opportunities for ATT and Xenia Hotels
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Xenia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and Xenia Hotels go up and down completely randomly.
Pair Corralation between ATT and Xenia Hotels
Assuming the 90 days trading horizon ATT Inc is expected to generate 0.66 times more return on investment than Xenia Hotels. However, ATT Inc is 1.53 times less risky than Xenia Hotels. It trades about 0.23 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.14 per unit of risk. If you would invest 1,925 in ATT Inc on August 28, 2024 and sell it today you would earn a total of 278.00 from holding ATT Inc or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Xenia Hotels Resorts
Performance |
| Timeline |
| ATT Inc |
| Xenia Hotels Resorts |
ATT and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Xenia Hotels
The main advantage of trading using opposite ATT and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.| ATT vs. Xenia Hotels Resorts | ATT vs. Nok Airlines PCL | ATT vs. Singapore Airlines Limited | ATT vs. InterContinental Hotels Group |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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