Correlation Between Hemisphere Energy and Xenia Hotels

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

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

Diversification Opportunities for Hemisphere Energy and Xenia Hotels

0.17

Correlation Coefficient

Hemisphere Energy  Xenia Hotels

Average diversification

The 3 months correlation between Hemisphere and Xenia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp 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 Hemisphere Energy 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 Hemisphere Energy Corp 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 Hemisphere Energy i.e., Hemisphere Energy and Xenia Hotels go up and down completely randomly.

Pair Corralation between Hemisphere Energy and Xenia Hotels

Assuming the 90 days trading horizon Hemisphere Energy is expected to generate 1.22 times less return on investment than Xenia Hotels. But when comparing it to its historical volatility, Hemisphere Energy Corp is 1.52 times less risky than Xenia Hotels. It trades about 0.08 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,328  in Xenia Hotels Resorts on September 23, 2024 and sell it today you would earn a total of  92.00  from holding Xenia Hotels Resorts or generate 6.93% return on investment over 90 days.

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

Hemisphere Energy Corp  vs.  Xenia Hotels Resorts

Hemisphere Energy Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hemisphere Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Xenia Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hemisphere Energy and Xenia Hotels

The main advantage of trading using opposite Hemisphere Energy and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy 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 Hemisphere Energy Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.