Correlation Between Transportadora and APPLE HOSPITALITY
Can any of the company-specific risk be diversified away by investing in both Transportadora and APPLE HOSPITALITY 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 Transportadora and APPLE HOSPITALITY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and APPLE HOSPITALITY REIT, you can compare the effects of market volatilities on Transportadora and APPLE HOSPITALITY 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 Transportadora with a short position of APPLE HOSPITALITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and APPLE HOSPITALITY.
Diversification Opportunities for Transportadora and APPLE HOSPITALITY
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and APPLE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and APPLE HOSPITALITY REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE HOSPITALITY REIT and Transportadora 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 Transportadora de Gas are associated (or correlated) with APPLE HOSPITALITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE HOSPITALITY REIT has no effect on the direction of Transportadora i.e., Transportadora and APPLE HOSPITALITY go up and down completely randomly.
Pair Corralation between Transportadora and APPLE HOSPITALITY
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.5 times more return on investment than APPLE HOSPITALITY. However, Transportadora is 2.5 times more volatile than APPLE HOSPITALITY REIT. It trades about 0.08 of its potential returns per unit of risk. APPLE HOSPITALITY REIT is currently generating about 0.03 per unit of risk. If you would invest 1,160 in Transportadora de Gas on August 31, 2024 and sell it today you would earn a total of 1,700 from holding Transportadora de Gas or generate 146.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. APPLE HOSPITALITY REIT
Performance |
| Timeline |
| Transportadora de Gas |
| APPLE HOSPITALITY REIT |
Transportadora and APPLE HOSPITALITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and APPLE HOSPITALITY
The main advantage of trading using opposite Transportadora and APPLE HOSPITALITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, APPLE HOSPITALITY 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 APPLE HOSPITALITY will offset losses from the drop in APPLE HOSPITALITY's long position.| Transportadora vs. Gladstone Investment | Transportadora vs. Games Workshop Group | Transportadora vs. MGIC INVESTMENT | Transportadora vs. HK Electric Investments |
| APPLE HOSPITALITY vs. DiamondRock Hospitality | APPLE HOSPITALITY vs. Sotherly Hotels | APPLE HOSPITALITY vs. Superior Plus Corp | APPLE HOSPITALITY vs. NMI Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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