Correlation Between Global Net and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Global Net and Host 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 Global Net and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Host Hotels Resorts, you can compare the effects of market volatilities on Global Net and Host 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 Global Net with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Host Hotels.
Diversification Opportunities for Global Net and Host Hotels
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Host is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Global Net 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 Global Net Lease are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Global Net i.e., Global Net and Host Hotels go up and down completely randomly.
Pair Corralation between Global Net and Host Hotels
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.76 times more return on investment than Host Hotels. However, Global Net Lease is 1.31 times less risky than Host Hotels. It trades about -0.06 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.12 per unit of risk. If you would invest 775.00 in Global Net Lease on January 17, 2025 and sell it today you would lose (29.00) from holding Global Net Lease or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Host Hotels Resorts
Performance |
| Timeline |
| Global Net Lease |
| Host Hotels Resorts |
Global Net and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Host Hotels
The main advantage of trading using opposite Global Net and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Global Net vs. Jupiter Fund Management | Global Net vs. BE Semiconductor Industries | Global Net vs. Advanced Medical Solutions | Global Net vs. Taiwan Semiconductor Manufacturing |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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