Correlation Between Global Net and Braemar Hotels

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

By analyzing existing cross correlation between Global Net Lease and Braemar Hotels Resorts, you can compare the effects of market volatilities on Global Net and Braemar 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 Global Net with a short position of Braemar Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Braemar Hotels.

Diversification Opportunities for Global Net and Braemar Hotels

0.25

Correlation Coefficient

Global Net  Braemar Hotels

Modest diversification

The 3 months correlation between Global and Braemar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Braemar Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotels Resorts and Global Net 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 Global Net Lease are associated (or correlated) with Braemar Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotels Resorts has no effect on the direction of Global Net i.e., Global Net and Braemar Hotels go up and down completely randomly.

Pair Corralation between Global Net and Braemar Hotels

Assuming the 90 days trading horizon Global Net is expected to generate 2.83 times less return on investment than Braemar Hotels. But when comparing it to its historical volatility, Global Net Lease is 1.03 times less risky than Braemar Hotels. It trades about 0.06 of its potential returns per unit of risk. Braemar Hotels Resorts is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,843  in Braemar Hotels Resorts on December 21, 2024 and sell it today you would earn a total of  222.00  from holding Braemar Hotels Resorts or generate 12.05% return on investment over 90 days.

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

Global Net Lease  vs.  Braemar Hotels Resorts

Global Net Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Net is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Braemar Hotels Resorts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Braemar Hotels Resorts are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Braemar Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Global Net and Braemar Hotels

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

The idea behind Global Net Lease and Braemar Hotels Resorts 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.