Correlation Between BRAEMAR HOTELS and PARK24 CO

Can any of the company-specific risk be diversified away by investing in both BRAEMAR HOTELS and PARK24 CO 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 BRAEMAR HOTELS and PARK24 CO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRAEMAR HOTELS RES and PARK24 LTD, you can compare the effects of market volatilities on BRAEMAR HOTELS and PARK24 CO 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 BRAEMAR HOTELS with a short position of PARK24 CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRAEMAR HOTELS and PARK24 CO.

Diversification Opportunities for BRAEMAR HOTELS and PARK24 CO

-0.19

Correlation Coefficient

BRAEMAR HOTELS  PARK24 CO

Good diversification

The 3 months correlation between BRAEMAR and PARK24 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and PARK24 LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARK24 LTD and BRAEMAR 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 BRAEMAR HOTELS RES are associated (or correlated) with PARK24 CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARK24 LTD has no effect on the direction of BRAEMAR HOTELS i.e., BRAEMAR HOTELS and PARK24 CO go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and PARK24 CO

Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to generate 1.65 times more return on investment than PARK24 CO. However, BRAEMAR HOTELS is 1.65 times more volatile than PARK24 LTD. It trades about -0.04 of its potential returns per unit of risk. PARK24 LTD is currently generating about -0.09 per unit of risk. If you would invest  303.00  in BRAEMAR HOTELS RES on December 21, 2024 and sell it today you would lose (31.00) from holding BRAEMAR HOTELS RES or give up 10.23% of portfolio value over 90 days.

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

BRAEMAR HOTELS RES  vs.  PARK24 LTD

BRAEMAR HOTELS RES

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRAEMAR HOTELS RES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PARK24 LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days PARK24 LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BRAEMAR HOTELS and PARK24 CO

The main advantage of trading using opposite BRAEMAR HOTELS and PARK24 CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRAEMAR HOTELS position performs unexpectedly, PARK24 CO 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 PARK24 CO will offset losses from the drop in PARK24 CO's long position.

The idea behind BRAEMAR HOTELS RES and PARK24 LTD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.