Correlation Between Wheeler Real and Xenia Hotels

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

By analyzing existing cross correlation between Wheeler Real Estate and Xenia Hotels Resorts, you can compare the effects of market volatilities on Wheeler Real and Xenia 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 Wheeler Real with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheeler Real and Xenia Hotels.

Diversification Opportunities for Wheeler Real and Xenia Hotels

-0.49

Correlation Coefficient

Wheeler Real  Xenia Hotels

Very good diversification

The 3 months correlation between Wheeler and Xenia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wheeler Real Estate and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and Wheeler Real 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 Wheeler Real Estate are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Wheeler Real i.e., Wheeler Real and Xenia Hotels go up and down completely randomly.

Pair Corralation between Wheeler Real and Xenia Hotels

Given the investment horizon of 90 days Wheeler Real Estate is expected to generate 24.0 times more return on investment than Xenia Hotels. However, Wheeler Real is 24.0 times more volatile than Xenia Hotels Resorts. It trades about 0.11 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.09 per unit of risk. If you would invest  678.00  in Wheeler Real Estate on September 3, 2024 and sell it today you would earn a total of  123.00  from holding Wheeler Real Estate or generate 18.14% return on investment over 90 days.

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

Wheeler Real Estate  vs.  Xenia Hotels Resorts

Wheeler Real Estate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wheeler Real Estate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Wheeler Real reported solid returns over the last few months and may actually be approaching a breakup point.

Xenia Hotels Resorts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wheeler Real and Xenia Hotels

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

The idea behind Wheeler Real Estate and Xenia Hotels 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.