Correlation Between Home Capital and Millenium Hotels
Can any of the company-specific risk be diversified away by investing in both Home Capital and Millenium Hotels 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 Home Capital and Millenium Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Millenium Hotels Real, you can compare the effects of market volatilities on Home Capital and Millenium Hotels 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 Home Capital with a short position of Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Millenium Hotels.
Diversification Opportunities for Home Capital and Millenium Hotels
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Millenium is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and Home Capital 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 Home Capital Rentals are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Home Capital i.e., Home Capital and Millenium Hotels go up and down completely randomly.
Pair Corralation between Home Capital and Millenium Hotels
Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Millenium Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Home Capital Rentals is 5.36 times less risky than Millenium Hotels. The stock trades about -0.02 of its potential returns per unit of risk. The Millenium Hotels Real is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 360.00 in Millenium Hotels Real on September 2, 2024 and sell it today you would lose (86.00) from holding Millenium Hotels Real or give up 23.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.79% |
| Values | Daily Returns |
Home Capital Rentals vs. Millenium Hotels Real
Performance |
| Timeline |
| Home Capital Rentals |
| Millenium Hotels Real |
Home Capital and Millenium Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Millenium Hotels
The main advantage of trading using opposite Home Capital and Millenium Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Millenium Hotels 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 Millenium Hotels will offset losses from the drop in Millenium Hotels' long position.| Home Capital vs. Industria de Diseno | Home Capital vs. Iberdrola SA | Home Capital vs. Banco Santander | Home Capital vs. Caixabank SA |
| Millenium Hotels vs. Inhome Prime Properties | Millenium Hotels vs. All Iron Re | Millenium Hotels vs. Caixabank SA | Millenium Hotels vs. Home Capital Rentals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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