Correlation Between INFORMATION SVC and Xenia Hotels

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

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

Diversification Opportunities for INFORMATION SVC and Xenia Hotels

0.78

Correlation Coefficient

INFORMATION SVC  Xenia Hotels

Poor diversification

The 3 months correlation between INFORMATION and Xenia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP 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 INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Xenia Hotels go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Xenia Hotels

Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the Xenia Hotels. In addition to that, INFORMATION SVC is 1.05 times more volatile than Xenia Hotels Resorts. It trades about -0.13 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about -0.11 per unit of volatility. If you would invest  1,418  in Xenia Hotels Resorts on November 29, 2024 and sell it today you would lose (188.00) from holding Xenia Hotels Resorts or give up 13.26% of portfolio value over 90 days.

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

INFORMATION SVC GRP  vs.  Xenia Hotels Resorts

INFORMATION SVC GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INFORMATION SVC GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INFORMATION SVC and Xenia Hotels

The main advantage of trading using opposite INFORMATION SVC and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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 INFORMATION SVC GRP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.