Correlation Between Xenia Hotels and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Xenia Hotels and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and SMA Solar.
Diversification Opportunities for Xenia Hotels and SMA Solar
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xenia and SMA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and SMA Solar go up and down completely randomly.
Pair Corralation between Xenia Hotels and SMA Solar
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Xenia Hotels Resorts is 2.13 times less risky than SMA Solar. The stock trades about -0.11 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,500 in SMA Solar Technology on December 2, 2024 and sell it today you would lose (61.00) from holding SMA Solar Technology or give up 4.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Xenia Hotels Resorts vs. SMA Solar Technology
Performance |
Timeline |
Xenia Hotels Resorts |
SMA Solar Technology |
Xenia Hotels and SMA Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xenia Hotels and SMA Solar
The main advantage of trading using opposite Xenia Hotels and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.Xenia Hotels vs. Monument Mining Limited | Xenia Hotels vs. MINCO SILVER | Xenia Hotels vs. Aya Gold Silver | Xenia Hotels vs. Sotherly Hotels |
SMA Solar vs. SPORT LISBOA E | SMA Solar vs. Zijin Mining Group | SMA Solar vs. Transport International Holdings | SMA Solar vs. FIREWEED METALS P |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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