Correlation Between Xenia Hotels and HomeToGo

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

Diversification Opportunities for Xenia Hotels and HomeToGo

0.28

Correlation Coefficient

Xenia Hotels  HomeToGo

Modest diversification

The 3 months correlation between Xenia and HomeToGo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and HomeToGo go up and down completely randomly.

Pair Corralation between Xenia Hotels and HomeToGo

Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 0.53 times more return on investment than HomeToGo. However, Xenia Hotels Resorts is 1.87 times less risky than HomeToGo. It trades about 0.21 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.08 per unit of risk. If you would invest  1,400  in Xenia Hotels Resorts on September 16, 2024 and sell it today you would earn a total of  120.00  from holding Xenia Hotels Resorts or generate 8.57% 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.  HomeToGo SE

Xenia Hotels Resorts

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

HomeToGo SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, HomeToGo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xenia Hotels and HomeToGo

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

The idea behind Xenia Hotels Resorts and HomeToGo SE 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..