Correlation Between SINCLAIRS HOTELS and FSN E

Can any of the company-specific risk be diversified away by investing in both SINCLAIRS HOTELS and FSN E 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 SINCLAIRS HOTELS and FSN E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SINCLAIRS HOTELS ORD and FSN E Commerce Ventures, you can compare the effects of market volatilities on SINCLAIRS HOTELS and FSN E 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 SINCLAIRS HOTELS with a short position of FSN E. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINCLAIRS HOTELS and FSN E.

Diversification Opportunities for SINCLAIRS HOTELS and FSN E

-0.65

Correlation Coefficient

SINCLAIRS HOTELS  FSN E

Excellent diversification

The 3 months correlation between SINCLAIRS and FSN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SINCLAIRS HOTELS ORD and FSN E Commerce Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSN E Commerce and SINCLAIRS HOTELS 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 SINCLAIRS HOTELS ORD are associated (or correlated) with FSN E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSN E Commerce has no effect on the direction of SINCLAIRS HOTELS i.e., SINCLAIRS HOTELS and FSN E go up and down completely randomly.

Pair Corralation between SINCLAIRS HOTELS and FSN E

Assuming the 90 days trading horizon SINCLAIRS HOTELS ORD is expected to under-perform the FSN E. In addition to that, SINCLAIRS HOTELS is 2.13 times more volatile than FSN E Commerce Ventures. It trades about -0.24 of its total potential returns per unit of risk. FSN E Commerce Ventures is currently generating about 0.15 per unit of volatility. If you would invest  16,005  in FSN E Commerce Ventures on October 24, 2024 and sell it today you would earn a total of  815.00  from holding FSN E Commerce Ventures or generate 5.09% return on investment over 90 days.

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

SINCLAIRS HOTELS ORD  vs.  FSN E Commerce Ventures

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, SINCLAIRS HOTELS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

FSN E Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FSN E Commerce Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, FSN E is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SINCLAIRS HOTELS and FSN E

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

The idea behind SINCLAIRS HOTELS ORD and FSN E Commerce Ventures 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.