Correlation Between Xenia Hotels and ASML HOLDING

Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and ASML HOLDING 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 Xenia Hotels and ASML HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xenia Hotels Resorts and ASML HOLDING NY, you can compare the effects of market volatilities on Xenia Hotels and ASML HOLDING 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 Xenia Hotels with a short position of ASML HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and ASML HOLDING.

Diversification Opportunities for Xenia Hotels and ASML HOLDING

0.29

Correlation Coefficient

Xenia Hotels  ASML HOLDING

Modest diversification

The 3 months correlation between Xenia and ASML is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY and Xenia Hotels 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 Xenia Hotels Resorts are associated (or correlated) with ASML HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML HOLDING NY has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and ASML HOLDING go up and down completely randomly.

Pair Corralation between Xenia Hotels and ASML HOLDING

Assuming the 90 days trading horizon Xenia Hotels is expected to generate 1.37 times less return on investment than ASML HOLDING. In addition to that, Xenia Hotels is 1.11 times more volatile than ASML HOLDING NY. It trades about 0.07 of its total potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.1 per unit of volatility. If you would invest  66,234  in ASML HOLDING NY on October 20, 2024 and sell it today you would earn a total of  7,566  from holding ASML HOLDING NY or generate 11.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xenia Hotels Resorts  vs.  ASML HOLDING NY

Xenia Hotels Resorts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ASML HOLDING NY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASML HOLDING NY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, ASML HOLDING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xenia Hotels and ASML HOLDING

The main advantage of trading using opposite Xenia Hotels and ASML HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, ASML HOLDING 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 ASML HOLDING will offset losses from the drop in ASML HOLDING's long position.

The idea behind Xenia Hotels Resorts and ASML HOLDING NY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.