Correlation Between Cleveland Cliffs and Hoteles City

Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Hoteles City 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 Cleveland Cliffs and Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cleveland Cliffs and Hoteles City Express, you can compare the effects of market volatilities on Cleveland Cliffs and Hoteles City 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 Cleveland Cliffs with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Hoteles City.

Diversification Opportunities for Cleveland Cliffs and Hoteles City

0.54

Correlation Coefficient

Cleveland Cliffs  Hoteles City

Very weak diversification

The 3 months correlation between Cleveland and Hoteles is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Hoteles City go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and Hoteles City

Assuming the 90 days trading horizon Cleveland Cliffs is expected to under-perform the Hoteles City. In addition to that, Cleveland Cliffs is 1.34 times more volatile than Hoteles City Express. It trades about -0.06 of its total potential returns per unit of risk. Hoteles City Express is currently generating about -0.04 per unit of volatility. If you would invest  492.00  in Hoteles City Express on October 9, 2024 and sell it today you would lose (51.00) from holding Hoteles City Express or give up 10.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Cleveland Cliffs  vs.  Hoteles City Express

Cleveland Cliffs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hoteles City Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles City Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cleveland Cliffs and Hoteles City

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

The idea behind Cleveland Cliffs and Hoteles City Express 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.