Correlation Between Defiance Hotel and Breakwave Dry

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

By analyzing existing cross correlation between Defiance Hotel Airline and Breakwave Dry Bulk, you can compare the effects of market volatilities on Defiance Hotel and Breakwave Dry 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 Defiance Hotel with a short position of Breakwave Dry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Hotel and Breakwave Dry.

Diversification Opportunities for Defiance Hotel and Breakwave Dry

-0.87

Correlation Coefficient

Defiance Hotel  Breakwave Dry

Pay attention - limited upside

The 3 months correlation between Defiance and Breakwave is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Hotel Airline and Breakwave Dry Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breakwave Dry Bulk and Defiance Hotel 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 Defiance Hotel Airline are associated (or correlated) with Breakwave Dry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breakwave Dry Bulk has no effect on the direction of Defiance Hotel i.e., Defiance Hotel and Breakwave Dry go up and down completely randomly.

Pair Corralation between Defiance Hotel and Breakwave Dry

Given the investment horizon of 90 days Defiance Hotel Airline is expected to generate 0.34 times more return on investment than Breakwave Dry. However, Defiance Hotel Airline is 2.94 times less risky than Breakwave Dry. It trades about 0.06 of its potential returns per unit of risk. Breakwave Dry Bulk is currently generating about -0.01 per unit of risk. If you would invest  1,824  in Defiance Hotel Airline on October 7, 2024 and sell it today you would earn a total of  778.00  from holding Defiance Hotel Airline or generate 42.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Defiance Hotel Airline  vs.  Breakwave Dry Bulk

Defiance Hotel Airline

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Hotel Airline are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Defiance Hotel showed solid returns over the last few months and may actually be approaching a breakup point.

Breakwave Dry Bulk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Breakwave Dry Bulk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic 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 ETF investors.

Pair Trading with Defiance Hotel and Breakwave Dry

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

The idea behind Defiance Hotel Airline and Breakwave Dry Bulk 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.