Correlation Between Emira Property and City Lodge
Can any of the company-specific risk be diversified away by investing in both Emira Property and City Lodge 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 Emira Property and City Lodge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emira Property and City Lodge Hotels, you can compare the effects of market volatilities on Emira Property and City Lodge 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 Emira Property with a short position of City Lodge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emira Property and City Lodge.
Diversification Opportunities for Emira Property and City Lodge
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Emira and City is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Emira Property and City Lodge Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Lodge Hotels and Emira Property 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 Emira Property are associated (or correlated) with City Lodge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Lodge Hotels has no effect on the direction of Emira Property i.e., Emira Property and City Lodge go up and down completely randomly.
Pair Corralation between Emira Property and City Lodge
Assuming the 90 days trading horizon Emira Property is expected to generate 2.64 times less return on investment than City Lodge. In addition to that, Emira Property is 1.27 times more volatile than City Lodge Hotels. It trades about 0.04 of its total potential returns per unit of risk. City Lodge Hotels is currently generating about 0.15 per unit of volatility. If you would invest 45,000 in City Lodge Hotels on September 14, 2024 and sell it today you would earn a total of 6,000 from holding City Lodge Hotels or generate 13.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Emira Property vs. City Lodge Hotels
Performance |
Timeline |
Emira Property |
City Lodge Hotels |
Emira Property and City Lodge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emira Property and City Lodge
The main advantage of trading using opposite Emira Property and City Lodge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emira Property position performs unexpectedly, City Lodge 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 City Lodge will offset losses from the drop in City Lodge's long position.Emira Property vs. City Lodge Hotels | Emira Property vs. HomeChoice Investments | Emira Property vs. Hosken Consolidated Investments | Emira Property vs. Deneb Investments |
City Lodge vs. British American Tobacco | City Lodge vs. Glencore PLC | City Lodge vs. Anglo American PLC | City Lodge vs. ABSA Bank Limited |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |