Correlation Between Braemar Hotels and Crombie Real

Can any of the company-specific risk be diversified away by investing in both Braemar Hotels and Crombie Real 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 Crombie Real 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 Crombie Real Estate, you can compare the effects of market volatilities on Braemar Hotels and Crombie Real 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 Crombie Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Crombie Real.

Diversification Opportunities for Braemar Hotels and Crombie Real

0.24

Correlation Coefficient

Braemar Hotels  Crombie Real

Modest diversification

The 3 months correlation between Braemar and Crombie is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate 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 Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Crombie Real go up and down completely randomly.

Pair Corralation between Braemar Hotels and Crombie Real

Assuming the 90 days trading horizon Braemar Hotels is expected to generate 1.41 times less return on investment than Crombie Real. But when comparing it to its historical volatility, Braemar Hotels Resorts is 1.04 times less risky than Crombie Real. It trades about 0.05 of its potential returns per unit of risk. Crombie Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  843.00  in Crombie Real Estate on September 15, 2024 and sell it today you would earn a total of  145.00  from holding Crombie Real Estate or generate 17.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.3%
Values	Daily Returns

Braemar Hotels Resorts  vs.  Crombie Real Estate

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.

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Braemar Hotels and Crombie Real

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

The idea behind Braemar Hotels Resorts and Crombie Real Estate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.