Correlation Between Select Sector and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Select Sector 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 Select Sector and FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and FibraHotel, you can compare the effects of market volatilities on Select Sector 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 Select Sector with a short position of FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and FibraHotel.
Diversification Opportunities for Select Sector and FibraHotel
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Select and FibraHotel is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Select Sector 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 The Select Sector 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 Select Sector i.e., Select Sector and FibraHotel go up and down completely randomly.
Pair Corralation between Select Sector and FibraHotel
Assuming the 90 days trading horizon Select Sector is expected to generate 1.51 times less return on investment than FibraHotel. But when comparing it to its historical volatility, The Select Sector is 1.63 times less risky than FibraHotel. It trades about 0.18 of its potential returns per unit of risk. FibraHotel is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 789.00 in FibraHotel on August 29, 2024 and sell it today you would earn a total of 82.00 from holding FibraHotel or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Select Sector vs. FibraHotel
Performance |
| Timeline |
| Select Sector |
| FibraHotel |
Select Sector and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and FibraHotel
The main advantage of trading using opposite Select Sector and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector 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.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| FibraHotel vs. UnitedHealth Group Incorporated | FibraHotel vs. Lockheed Martin | FibraHotel vs. The Select Sector | FibraHotel vs. SPDR Series Trust |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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