Correlation Between Cimpress and LuxUrban Hotels

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

By analyzing existing cross correlation between Cimpress NV and LuxUrban Hotels 1300, you can compare the effects of market volatilities on Cimpress and LuxUrban Hotels 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 Cimpress with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cimpress and LuxUrban Hotels.

Diversification Opportunities for Cimpress and LuxUrban Hotels

0.01

Correlation Coefficient

Cimpress  LuxUrban Hotels

Significant diversification

The 3 months correlation between Cimpress and LuxUrban is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 and Cimpress 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 Cimpress NV are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of Cimpress i.e., Cimpress and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between Cimpress and LuxUrban Hotels

Given the investment horizon of 90 days Cimpress NV is expected to generate 0.4 times more return on investment than LuxUrban Hotels. However, Cimpress NV is 2.51 times less risky than LuxUrban Hotels. It trades about -0.02 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.11 per unit of risk. If you would invest  7,713  in Cimpress NV on October 26, 2024 and sell it today you would lose (401.00) from holding Cimpress NV or give up 5.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Cimpress NV  vs.  LuxUrban Hotels 1300

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cimpress and LuxUrban Hotels

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

The idea behind Cimpress NV and LuxUrban Hotels 1300 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.