Correlation Between Xenia Hotels and GLOBUS MEDICAL

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

Diversification Opportunities for Xenia Hotels and GLOBUS MEDICAL

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Xenia and GLOBUS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A 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 GLOBUS MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and GLOBUS MEDICAL go up and down completely randomly.

Pair Corralation between Xenia Hotels and GLOBUS MEDICAL

Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 1.54 times more return on investment than GLOBUS MEDICAL. However, Xenia Hotels is 1.54 times more volatile than GLOBUS MEDICAL A. It trades about 0.01 of its potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about -0.1 per unit of risk. If you would invest  1,420  in Xenia Hotels Resorts on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Xenia Hotels Resorts or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Xenia Hotels Resorts  vs.  GLOBUS MEDICAL A

 Performance 
       Timeline  
Xenia Hotels Resorts 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
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 uncertain technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.
GLOBUS MEDICAL A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Xenia Hotels and GLOBUS MEDICAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xenia Hotels and GLOBUS MEDICAL

The main advantage of trading using opposite Xenia Hotels and GLOBUS MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, GLOBUS MEDICAL 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 GLOBUS MEDICAL will offset losses from the drop in GLOBUS MEDICAL's long position.
The idea behind Xenia Hotels Resorts and GLOBUS MEDICAL A 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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