Correlation Between W P and Xenia Hotels

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

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

Diversification Opportunities for W P and Xenia Hotels

-0.85

Correlation Coefficient

W P  Xenia Hotels

Pay attention - limited upside

The 3 months correlation between WPC and Xenia is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey 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 W P 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 W P Carey 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 W P i.e., W P and Xenia Hotels go up and down completely randomly.

Pair Corralation between W P and Xenia Hotels

Considering the 90-day investment horizon W P Carey is expected to generate 0.78 times more return on investment than Xenia Hotels. However, W P Carey is 1.28 times less risky than Xenia Hotels. It trades about 0.2 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about -0.19 per unit of risk. If you would invest  5,395  in W P Carey on December 26, 2024 and sell it today you would earn a total of  895.00  from holding W P Carey or generate 16.59% return on investment over 90 days.

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

W P Carey  vs.  Xenia Hotels Resorts

W P Carey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, W P exhibited solid returns over the last few months and may actually be approaching a breakup point.

Xenia Hotels Resorts

Risk-Adjusted Performance

Very Weak

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

Pair Trading with W P and Xenia Hotels

The main advantage of trading using opposite W P and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P 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 W P Carey 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.