Correlation Between Micro Leasing and Quality Hospitality

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

By analyzing existing cross correlation between Micro Leasing Public and Quality Hospitality Leasehold, you can compare the effects of market volatilities on Micro Leasing and Quality Hospitality 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 Micro Leasing with a short position of Quality Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Leasing and Quality Hospitality.

Diversification Opportunities for Micro Leasing and Quality Hospitality

-0.1

Correlation Coefficient

Micro Leasing  Quality Hospitality

Good diversification

The 3 months correlation between Micro and Quality is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micro Leasing Public and Quality Hospitality Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Hospitality and Micro Leasing 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 Micro Leasing Public are associated (or correlated) with Quality Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Hospitality has no effect on the direction of Micro Leasing i.e., Micro Leasing and Quality Hospitality go up and down completely randomly.

Pair Corralation between Micro Leasing and Quality Hospitality

Assuming the 90 days trading horizon Micro Leasing Public is expected to under-perform the Quality Hospitality. In addition to that, Micro Leasing is 2.17 times more volatile than Quality Hospitality Leasehold. It trades about -0.13 of its total potential returns per unit of risk. Quality Hospitality Leasehold is currently generating about 0.06 per unit of volatility. If you would invest  340.00  in Quality Hospitality Leasehold on September 12, 2024 and sell it today you would earn a total of  20.00  from holding Quality Hospitality Leasehold or generate 5.88% return on investment over 90 days.

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

Micro Leasing Public  vs.  Quality Hospitality Leasehold

Micro Leasing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micro Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Quality Hospitality

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Hospitality Leasehold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Quality Hospitality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micro Leasing and Quality Hospitality

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

The idea behind Micro Leasing Public and Quality Hospitality Leasehold 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.