Correlation Between GENERAL and LuxUrban Hotels

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

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

Diversification Opportunities for GENERAL and LuxUrban Hotels

0.22

Correlation Coefficient

GENERAL  LuxUrban Hotels

Modest diversification

The 3 months correlation between GENERAL and LuxUrban is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP 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 GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between GENERAL and LuxUrban Hotels

Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to generate 0.54 times more return on investment than LuxUrban Hotels. However, GENERAL ELEC CAP is 1.87 times less risky than LuxUrban Hotels. It trades about 0.02 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about 0.0 per unit of risk. If you would invest  8,662  in GENERAL ELEC CAP on October 11, 2024 and sell it today you would earn a total of  211.00  from holding GENERAL ELEC CAP or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.28%
Values	Daily Returns

GENERAL ELEC CAP  vs.  LuxUrban Hotels 1300

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GENERAL ELEC CAP investors.

LuxUrban Hotels 1300

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, LuxUrban Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GENERAL and LuxUrban Hotels

The main advantage of trading using opposite GENERAL and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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 GENERAL ELEC CAP 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.