Correlation Between Xenia Hotels and Eidesvik Offshore

Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Eidesvik Offshore 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 Eidesvik Offshore 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 Eidesvik Offshore ASA, you can compare the effects of market volatilities on Xenia Hotels and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Eidesvik Offshore.

Diversification Opportunities for Xenia Hotels and Eidesvik Offshore

-0.31

Correlation Coefficient

Xenia Hotels  Eidesvik Offshore

Very good diversification

The 3 months correlation between Xenia and Eidesvik is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Xenia Hotels and Eidesvik Offshore

Assuming the 90 days trading horizon Xenia Hotels is expected to generate 2.69 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Xenia Hotels Resorts is 1.6 times less risky than Eidesvik Offshore. It trades about 0.02 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Eidesvik Offshore ASA on October 26, 2024 and sell it today you would earn a total of  29.00  from holding Eidesvik Offshore ASA or generate 35.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xenia Hotels Resorts  vs.  Eidesvik Offshore ASA

Xenia Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 4 (%) 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.

Eidesvik Offshore ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eidesvik Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xenia Hotels and Eidesvik Offshore

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

The idea behind Xenia Hotels Resorts and Eidesvik Offshore ASA 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.

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