Correlation Between Target Hospitality and One Group
Can any of the company-specific risk be diversified away by investing in both Target Hospitality and One Group 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 Target Hospitality and One Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Hospitality Corp and One Group Hospitality, you can compare the effects of market volatilities on Target Hospitality and One Group 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 Target Hospitality with a short position of One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Hospitality and One Group.
Diversification Opportunities for Target Hospitality and One Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Target and One is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Target Hospitality Corp and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality and Target Hospitality 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 Target Hospitality Corp are associated (or correlated) with One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Target Hospitality i.e., Target Hospitality and One Group go up and down completely randomly.
Pair Corralation between Target Hospitality and One Group
Allowing for the 90-day total investment horizon Target Hospitality Corp is expected to under-perform the One Group. But the stock apears to be less risky and, when comparing its historical volatility, Target Hospitality Corp is 1.09 times less risky than One Group. The stock trades about -0.2 of its potential returns per unit of risk. The One Group Hospitality is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 308.00 in One Group Hospitality on September 13, 2024 and sell it today you would lose (1.00) from holding One Group Hospitality or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Hospitality Corp vs. One Group Hospitality
Performance |
| Timeline |
| Target Hospitality Corp |
| One Group Hospitality |
Target Hospitality and One Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Hospitality and One Group
The main advantage of trading using opposite Target Hospitality and One Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Hospitality position performs unexpectedly, One Group 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 One Group will offset losses from the drop in One Group's long position.| Target Hospitality vs. OneSpaWorld Holdings | Target Hospitality vs. KLX Energy Services | Target Hospitality vs. International Money Express | Target Hospitality vs. Concrete Pumping 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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