Correlation Between Defiance Hotel and SonicShares Global

Can any of the company-specific risk be diversified away by investing in both Defiance Hotel and SonicShares Global 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 SonicShares Global 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 SonicShares Global Shipping, you can compare the effects of market volatilities on Defiance Hotel and SonicShares Global 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 SonicShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Hotel and SonicShares Global.

Diversification Opportunities for Defiance Hotel and SonicShares Global

0.1

Correlation Coefficient

Defiance Hotel  SonicShares Global

Average diversification

The 3 months correlation between Defiance and SonicShares is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Hotel Airline and SonicShares Global Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SonicShares Global 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 SonicShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SonicShares Global has no effect on the direction of Defiance Hotel i.e., Defiance Hotel and SonicShares Global go up and down completely randomly.

Pair Corralation between Defiance Hotel and SonicShares Global

Given the investment horizon of 90 days Defiance Hotel Airline is expected to under-perform the SonicShares Global. In addition to that, Defiance Hotel is 1.35 times more volatile than SonicShares Global Shipping. It trades about -0.14 of its total potential returns per unit of risk. SonicShares Global Shipping is currently generating about -0.04 per unit of volatility. If you would invest  2,735  in SonicShares Global Shipping on December 28, 2024 and sell it today you would lose (74.34) from holding SonicShares Global Shipping or give up 2.72% of portfolio value over 90 days.

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

Defiance Hotel Airline  vs.  SonicShares Global Shipping

Defiance Hotel Airline

Risk-Adjusted Performance

Very Weak

Over the last 90 days Defiance Hotel Airline 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 Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

SonicShares Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days SonicShares Global Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SonicShares Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Defiance Hotel and SonicShares Global

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

The idea behind Defiance Hotel Airline and SonicShares Global Shipping 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.