Correlation Between Braemar Hotels and America Great

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

By analyzing existing cross correlation between Braemar Hotels Resorts and America Great Health, you can compare the effects of market volatilities on Braemar Hotels and America Great 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 America Great. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and America Great.

Diversification Opportunities for Braemar Hotels and America Great

-0.17

Correlation Coefficient

Braemar Hotels  America Great

Good diversification

The 3 months correlation between Braemar and America is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and America Great Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Great Health 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 Resorts are associated (or correlated) with America Great. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Great Health has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and America Great go up and down completely randomly.

Pair Corralation between Braemar Hotels and America Great

Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to generate 0.09 times more return on investment than America Great. However, Braemar Hotels Resorts is 11.25 times less risky than America Great. It trades about -0.25 of its potential returns per unit of risk. America Great Health is currently generating about -0.16 per unit of risk. If you would invest  2,081  in Braemar Hotels Resorts on September 16, 2024 and sell it today you would lose (210.00) from holding Braemar Hotels Resorts or give up 10.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Braemar Hotels Resorts  vs.  America Great Health

Braemar Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braemar Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Braemar Hotels is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

America Great Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Great Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Braemar Hotels and America Great

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

The idea behind Braemar Hotels Resorts and America Great Health 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.