Correlation Between BRAEMAR HOTELS and GOODYEAR T

Can any of the company-specific risk be diversified away by investing in both BRAEMAR HOTELS and GOODYEAR T 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 GOODYEAR T 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 GOODYEAR T RUBBER, you can compare the effects of market volatilities on BRAEMAR HOTELS and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRAEMAR HOTELS and GOODYEAR T.

Diversification Opportunities for BRAEMAR HOTELS and GOODYEAR T

0.61

Correlation Coefficient

BRAEMAR HOTELS  GOODYEAR T

Poor diversification

The 3 months correlation between BRAEMAR and GOODYEAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of BRAEMAR HOTELS i.e., BRAEMAR HOTELS and GOODYEAR T go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and GOODYEAR T

Assuming the 90 days horizon BRAEMAR HOTELS is expected to generate 35.72 times less return on investment than GOODYEAR T. In addition to that, BRAEMAR HOTELS is 1.62 times more volatile than GOODYEAR T RUBBER. It trades about 0.0 of its total potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.09 per unit of volatility. If you would invest  789.00  in GOODYEAR T RUBBER on October 26, 2024 and sell it today you would earn a total of  111.00  from holding GOODYEAR T RUBBER or generate 14.07% return on investment over 90 days.

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

BRAEMAR HOTELS RES  vs.  GOODYEAR T RUBBER

BRAEMAR HOTELS RES

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, BRAEMAR HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GOODYEAR T RUBBER

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GOODYEAR T unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRAEMAR HOTELS and GOODYEAR T

The main advantage of trading using opposite BRAEMAR HOTELS and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRAEMAR HOTELS position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.

The idea behind BRAEMAR HOTELS RES and GOODYEAR T RUBBER 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..