Correlation Between RH and Target Hospitality
Can any of the company-specific risk be diversified away by investing in both RH and Target Hospitality 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 RH and Target Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RH and Target Hospitality Corp, you can compare the effects of market volatilities on RH and Target Hospitality 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 RH with a short position of Target Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of RH and Target Hospitality.
Diversification Opportunities for RH and Target Hospitality
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RH and Target is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding RH and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp and RH 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 RH are associated (or correlated) with Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of RH i.e., RH and Target Hospitality go up and down completely randomly.
Pair Corralation between RH and Target Hospitality
Allowing for the 90-day total investment horizon RH is expected to generate 1.19 times more return on investment than Target Hospitality. However, RH is 1.19 times more volatile than Target Hospitality Corp. It trades about 0.1 of its potential returns per unit of risk. Target Hospitality Corp is currently generating about 0.04 per unit of risk. If you would invest 28,979 in RH on October 26, 2024 and sell it today you would earn a total of 14,467 from holding RH or generate 49.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.19% |
Values | Daily Returns |
RH vs. Target Hospitality Corp
Performance |
Timeline |
RH |
Target Hospitality Corp |
RH and Target Hospitality Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RH and Target Hospitality
The main advantage of trading using opposite RH and Target Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RH position performs unexpectedly, Target Hospitality 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 Target Hospitality will offset losses from the drop in Target Hospitality's long position.The idea behind RH and Target Hospitality Corp 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.Target Hospitality vs. OneSpaWorld Holdings | Target Hospitality vs. KLX Energy Services | Target Hospitality vs. International Money Express | Target Hospitality vs. Concrete Pumping Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |