Correlation Between United States and FibraHotel
Can any of the company-specific risk be diversified away by investing in both United States and FibraHotel 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 United States and FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and FibraHotel, you can compare the effects of market volatilities on United States and FibraHotel 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 United States with a short position of FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and FibraHotel.
Diversification Opportunities for United States and FibraHotel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and FibraHotel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and United States 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 United States Steel are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of United States i.e., United States and FibraHotel go up and down completely randomly.
Pair Corralation between United States and FibraHotel
Given the investment horizon of 90 days United States is expected to generate 1.29 times less return on investment than FibraHotel. In addition to that, United States is 1.24 times more volatile than FibraHotel. It trades about 0.03 of its total potential returns per unit of risk. FibraHotel is currently generating about 0.05 per unit of volatility. If you would invest 898.00 in FibraHotel on November 2, 2024 and sell it today you would earn a total of 102.00 from holding FibraHotel or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. FibraHotel
Performance |
| Timeline |
| United States Steel |
| FibraHotel |
United States and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and FibraHotel
The main advantage of trading using opposite United States and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| United States vs. KB Home | United States vs. Grupo Hotelero Santa | United States vs. Monster Beverage Corp | United States vs. Verizon Communications |
| FibraHotel vs. McEwen Mining | FibraHotel vs. Verizon Communications | FibraHotel vs. Southwest Airlines | FibraHotel vs. Costco Wholesale |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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