Correlation Between BRAEMAR HOTELS and INTERCONT HOTELS

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

Diversification Opportunities for BRAEMAR HOTELS and INTERCONT HOTELS

0.84

Correlation Coefficient

BRAEMAR HOTELS  INTERCONT HOTELS

Very poor diversification

The 3 months correlation between BRAEMAR and INTERCONT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS 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 INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of BRAEMAR HOTELS i.e., BRAEMAR HOTELS and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and INTERCONT HOTELS

Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to generate 3.45 times more return on investment than INTERCONT HOTELS. However, BRAEMAR HOTELS is 3.45 times more volatile than INTERCONT HOTELS. It trades about 0.05 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.1 per unit of risk. If you would invest  191.00  in BRAEMAR HOTELS RES on October 9, 2024 and sell it today you would earn a total of  89.00  from holding BRAEMAR HOTELS RES or generate 46.6% return on investment over 90 days.

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

BRAEMAR HOTELS RES  vs.  INTERCONT HOTELS

BRAEMAR HOTELS RES

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRAEMAR HOTELS RES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BRAEMAR HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

INTERCONT HOTELS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRAEMAR HOTELS and INTERCONT HOTELS

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

The idea behind BRAEMAR HOTELS RES and INTERCONT HOTELS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.