Correlation Between Sonder Holdings and LuxUrban Hotels

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

By analyzing existing cross correlation between Sonder Holdings and LuxUrban Hotels 1300, you can compare the effects of market volatilities on Sonder Holdings and LuxUrban 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 Sonder Holdings with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonder Holdings and LuxUrban Hotels.

Diversification Opportunities for Sonder Holdings and LuxUrban Hotels

-0.34

Correlation Coefficient

Sonder Holdings  LuxUrban Hotels

Very good diversification

The 3 months correlation between Sonder and LuxUrban is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sonder Holdings and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 and Sonder Holdings 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 Sonder Holdings are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of Sonder Holdings i.e., Sonder Holdings and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between Sonder Holdings and LuxUrban Hotels

Assuming the 90 days horizon Sonder Holdings is expected to generate 11.51 times more return on investment than LuxUrban Hotels. However, Sonder Holdings is 11.51 times more volatile than LuxUrban Hotels 1300. It trades about 0.08 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.04 per unit of risk. If you would invest  16.00  in Sonder Holdings on October 25, 2024 and sell it today you would lose (14.51) from holding Sonder Holdings or give up 90.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.99%
Values	Daily Returns

Sonder Holdings  vs.  LuxUrban Hotels 1300

Sonder Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonder Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sonder Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sonder Holdings and LuxUrban Hotels

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

The idea behind Sonder Holdings and LuxUrban Hotels 1300 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.