Correlation Between City Lodge and Boxer Retail
Can any of the company-specific risk be diversified away by investing in both City Lodge and Boxer Retail 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 City Lodge and Boxer Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Boxer Retail, you can compare the effects of market volatilities on City Lodge and Boxer Retail 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 City Lodge with a short position of Boxer Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Boxer Retail.
Diversification Opportunities for City Lodge and Boxer Retail
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and Boxer is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Boxer Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxer Retail and City Lodge 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 City Lodge Hotels are associated (or correlated) with Boxer Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxer Retail has no effect on the direction of City Lodge i.e., City Lodge and Boxer Retail go up and down completely randomly.
Pair Corralation between City Lodge and Boxer Retail
Assuming the 90 days trading horizon City Lodge is expected to generate 3.86 times less return on investment than Boxer Retail. But when comparing it to its historical volatility, City Lodge Hotels is 5.8 times less risky than Boxer Retail. It trades about 0.34 of its potential returns per unit of risk. Boxer Retail is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 540,000 in Boxer Retail on September 24, 2024 and sell it today you would earn a total of 100,000 from holding Boxer Retail or generate 18.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
City Lodge Hotels vs. Boxer Retail
Performance |
Timeline |
City Lodge Hotels |
Boxer Retail |
City Lodge and Boxer Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with City Lodge and Boxer Retail
The main advantage of trading using opposite City Lodge and Boxer Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Boxer Retail 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 Boxer Retail will offset losses from the drop in Boxer Retail's long position.City Lodge vs. Capitec Bank Holdings | City Lodge vs. Astoria Investments | City Lodge vs. Kumba Iron Ore | City Lodge vs. Ascendis Health |
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Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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