Correlation Between BRAEMAR HOTELS and Whitehaven Coal

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

Diversification Opportunities for BRAEMAR HOTELS and Whitehaven Coal

0.11

Correlation Coefficient

BRAEMAR HOTELS  Whitehaven Coal

Average diversification

The 3 months correlation between BRAEMAR and Whitehaven is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of BRAEMAR HOTELS i.e., BRAEMAR HOTELS and Whitehaven Coal go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and Whitehaven Coal

Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to generate 2.34 times more return on investment than Whitehaven Coal. However, BRAEMAR HOTELS is 2.34 times more volatile than Whitehaven Coal Limited. It trades about 0.01 of its potential returns per unit of risk. Whitehaven Coal Limited is currently generating about -0.03 per unit of risk. If you would invest  255.00  in BRAEMAR HOTELS RES on October 24, 2024 and sell it today you would lose (11.00) from holding BRAEMAR HOTELS RES or give up 4.31% of portfolio value over 90 days.

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

BRAEMAR HOTELS RES  vs.  Whitehaven Coal Limited

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.

Whitehaven Coal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whitehaven Coal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Whitehaven Coal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BRAEMAR HOTELS and Whitehaven Coal

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

The idea behind BRAEMAR HOTELS RES and Whitehaven Coal Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.