Correlation Between Service Properties and Braemar Hotel
Can any of the company-specific risk be diversified away by investing in both Service Properties and Braemar Hotel 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 Service Properties and Braemar Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Properties Trust and Braemar Hotel Resorts, you can compare the effects of market volatilities on Service Properties and Braemar Hotel 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 Service Properties with a short position of Braemar Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Properties and Braemar Hotel.
Diversification Opportunities for Service Properties and Braemar Hotel
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Service and Braemar is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust and Braemar Hotel Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotel Resorts and Service Properties 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 Service Properties Trust are associated (or correlated) with Braemar Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotel Resorts has no effect on the direction of Service Properties i.e., Service Properties and Braemar Hotel go up and down completely randomly.
Pair Corralation between Service Properties and Braemar Hotel
Considering the 90-day investment horizon Service Properties Trust is expected to under-perform the Braemar Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Service Properties Trust is 1.21 times less risky than Braemar Hotel. The stock trades about -0.1 of its potential returns per unit of risk. The Braemar Hotel Resorts is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 199.00 in Braemar Hotel Resorts on November 3, 2024 and sell it today you would earn a total of 56.00 from holding Braemar Hotel Resorts or generate 28.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Service Properties Trust vs. Braemar Hotel Resorts
Performance |
| Timeline |
| Service Properties Trust |
| Braemar Hotel Resorts |
Service Properties and Braemar Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service Properties and Braemar Hotel
The main advantage of trading using opposite Service Properties and Braemar Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties position performs unexpectedly, Braemar Hotel 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 Hotel will offset losses from the drop in Braemar Hotel's long position.| Service Properties vs. Triumph Apparel | Service Properties vs. Denison Mines Corp | Service Properties vs. Zijin Mining Group | Service Properties vs. Summit Materials |
| Braemar Hotel vs. Summit Hotel Properties | Braemar Hotel vs. Service Properties Trust | Braemar Hotel vs. InnSuites Hospitality Trust | Braemar Hotel vs. Sotherly Hotels PR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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