Correlation Between FrontView REIT, and Dan Hotels

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

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

Diversification Opportunities for FrontView REIT, and Dan Hotels

0.15

Correlation Coefficient

FrontView REIT,  Dan Hotels

Average diversification

The 3 months correlation between FrontView and Dan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FrontView REIT, and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and FrontView REIT, 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 FrontView REIT, are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of FrontView REIT, i.e., FrontView REIT, and Dan Hotels go up and down completely randomly.

Pair Corralation between FrontView REIT, and Dan Hotels

Considering the 90-day investment horizon FrontView REIT, is expected to generate 5.75 times less return on investment than Dan Hotels. But when comparing it to its historical volatility, FrontView REIT, is 2.05 times less risky than Dan Hotels. It trades about 0.08 of its potential returns per unit of risk. Dan Hotels is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  225,000  in Dan Hotels on September 17, 2024 and sell it today you would earn a total of  20,100  from holding Dan Hotels or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

FrontView REIT,  vs.  Dan Hotels

FrontView REIT,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FrontView REIT, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FrontView REIT, is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dan Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dan Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dan Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FrontView REIT, and Dan Hotels

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

The idea behind FrontView REIT, and Dan Hotels 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.