Correlation Between Data#3 and Xenia Hotels

Can any of the company-specific risk be diversified away by investing in both Data#3 and Xenia Hotels 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 Data#3 and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data3 Limited and Xenia Hotels Resorts, you can compare the effects of market volatilities on Data#3 and Xenia Hotels 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 Data#3 with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data#3 and Xenia Hotels.

Diversification Opportunities for Data#3 and Xenia Hotels

-0.05

Correlation Coefficient

Data#3  Xenia Hotels

Good diversification

The 3 months correlation between Data#3 and Xenia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Data3 Limited and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and Data#3 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 Data3 Limited are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Data#3 i.e., Data#3 and Xenia Hotels go up and down completely randomly.

Pair Corralation between Data#3 and Xenia Hotels

Assuming the 90 days horizon Data3 Limited is expected to under-perform the Xenia Hotels. In addition to that, Data#3 is 1.16 times more volatile than Xenia Hotels Resorts. It trades about -0.08 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.05 per unit of volatility. If you would invest  1,286  in Xenia Hotels Resorts on September 22, 2024 and sell it today you would earn a total of  134.00  from holding Xenia Hotels Resorts or generate 10.42% return on investment over 90 days.

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

Data3 Limited  vs.  Xenia Hotels Resorts

Data3 Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data3 Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Xenia Hotels Resorts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 5 (%) 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.

Pair Trading with Data#3 and Xenia Hotels

The main advantage of trading using opposite Data#3 and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data#3 position performs unexpectedly, Xenia Hotels 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.

The idea behind Data3 Limited and Xenia Hotels Resorts 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 Stocks Directory module to find actively traded stocks across global markets.