Correlation Between ABO-GROUP ENVIRONMENT and Xenia Hotels

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

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

Diversification Opportunities for ABO-GROUP ENVIRONMENT and Xenia Hotels

-0.68

Correlation Coefficient

ABO-GROUP ENVIRONMENT  Xenia Hotels

Excellent diversification

The 3 months correlation between ABO-GROUP and Xenia is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ABO GROUP ENVIRONMENT 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 ABO-GROUP ENVIRONMENT 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 ABO GROUP ENVIRONMENT 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 ABO-GROUP ENVIRONMENT i.e., ABO-GROUP ENVIRONMENT and Xenia Hotels go up and down completely randomly.

Pair Corralation between ABO-GROUP ENVIRONMENT and Xenia Hotels

Assuming the 90 days trading horizon ABO GROUP ENVIRONMENT is expected to generate 0.71 times more return on investment than Xenia Hotels. However, ABO GROUP ENVIRONMENT is 1.42 times less risky than Xenia Hotels. It trades about -0.02 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about -0.16 per unit of risk. If you would invest  490.00  in ABO GROUP ENVIRONMENT on October 6, 2024 and sell it today you would lose (4.00) from holding ABO GROUP ENVIRONMENT or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

ABO GROUP ENVIRONMENT  vs.  Xenia Hotels Resorts

ABO GROUP ENVIRONMENT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xenia Hotels Resorts

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Xenia Hotels is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ABO-GROUP ENVIRONMENT and Xenia Hotels

The main advantage of trading using opposite ABO-GROUP ENVIRONMENT and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABO-GROUP ENVIRONMENT 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 ABO GROUP ENVIRONMENT 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.