Correlation Between Xenia Hotels and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Tokyo Electron 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 Tokyo Electron 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 Tokyo Electron Limited, you can compare the effects of market volatilities on Xenia Hotels and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Tokyo Electron.
Diversification Opportunities for Xenia Hotels and Tokyo Electron
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xenia and Tokyo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Tokyo Electron go up and down completely randomly.
Pair Corralation between Xenia Hotels and Tokyo Electron
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 0.87 times more return on investment than Tokyo Electron. However, Xenia Hotels Resorts is 1.15 times less risky than Tokyo Electron. It trades about -0.2 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about -0.28 per unit of risk. If you would invest 1,430 in Xenia Hotels Resorts on December 2, 2024 and sell it today you would lose (130.00) from holding Xenia Hotels Resorts or give up 9.09% 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. Tokyo Electron Limited
Performance |
Timeline |
Xenia Hotels Resorts |
Tokyo Electron |
Xenia Hotels and Tokyo Electron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xenia Hotels and Tokyo Electron
The main advantage of trading using opposite Xenia Hotels and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron'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 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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