Correlation Between National Retail and Braemar Hotel

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

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

Diversification Opportunities for National Retail and Braemar Hotel

0.36

Correlation Coefficient

National Retail  Braemar Hotel

Weak diversification

The 3 months correlation between National and Braemar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Braemar Hotel Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotel Resorts and National Retail 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 National Retail Properties are associated (or correlated) with Braemar Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotel Resorts has no effect on the direction of National Retail i.e., National Retail and Braemar Hotel go up and down completely randomly.

Pair Corralation between National Retail and Braemar Hotel

Considering the 90-day investment horizon National Retail Properties is expected to generate 0.5 times more return on investment than Braemar Hotel. However, National Retail Properties is 2.01 times less risky than Braemar Hotel. It trades about 0.07 of its potential returns per unit of risk. Braemar Hotel Resorts is currently generating about -0.08 per unit of risk. If you would invest  3,978  in National Retail Properties on December 29, 2024 and sell it today you would earn a total of  231.00  from holding National Retail Properties or generate 5.81% return on investment over 90 days.

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

National Retail Properties  vs.  Braemar Hotel Resorts

National Retail Prop

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, National Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Braemar Hotel Resorts

Risk-Adjusted Performance

Very Weak

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

Pair Trading with National Retail and Braemar Hotel

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

The idea behind National Retail Properties and Braemar Hotel 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.