Correlation Between El Pollo and LuxUrban Hotels
Can any of the company-specific risk be diversified away by investing in both El Pollo and LuxUrban 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 El Pollo and LuxUrban Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Pollo Loco and LuxUrban Hotels 1300, you can compare the effects of market volatilities on El Pollo and LuxUrban 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 El Pollo with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Pollo and LuxUrban Hotels.
Diversification Opportunities for El Pollo and LuxUrban Hotels
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LOCO and LuxUrban is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 and El Pollo 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 El Pollo Loco are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of El Pollo i.e., El Pollo and LuxUrban Hotels go up and down completely randomly.
Pair Corralation between El Pollo and LuxUrban Hotels
Given the investment horizon of 90 days El Pollo Loco is expected to generate 0.65 times more return on investment than LuxUrban Hotels. However, El Pollo Loco is 1.53 times less risky than LuxUrban Hotels. It trades about 0.06 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.02 per unit of risk. If you would invest 974.00 in El Pollo Loco on February 27, 2024 and sell it today you would earn a total of 66.00 from holding El Pollo Loco or generate 6.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
El Pollo Loco vs. LuxUrban Hotels 1300
Performance |
Timeline |
El Pollo Loco |
LuxUrban Hotels 1300 |
El Pollo and LuxUrban Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with El Pollo and LuxUrban Hotels
The main advantage of trading using opposite El Pollo and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Pollo position performs unexpectedly, LuxUrban 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 LuxUrban Hotels will offset losses from the drop in LuxUrban Hotels' long position.El Pollo vs. Chuys Holdings | El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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