Correlation Between Hilton Worldwide and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Dow Jones 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 Hilton Worldwide and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Hilton Worldwide and Dow Jones 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 Hilton Worldwide with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Dow Jones.
Diversification Opportunities for Hilton Worldwide and Dow Jones
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hilton and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Hilton Worldwide 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 Hilton Worldwide Holdings are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Dow Jones go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Dow Jones
Assuming the 90 days trading horizon Hilton Worldwide Holdings is expected to generate 1.95 times more return on investment than Dow Jones. However, Hilton Worldwide is 1.95 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 13,420 in Hilton Worldwide Holdings on August 28, 2024 and sell it today you would earn a total of 11,934 from holding Hilton Worldwide Holdings or generate 88.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.59% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Hilton Worldwide and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Hilton Worldwide Holdings
Pair trading matchups for Hilton Worldwide
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Hilton Worldwide and Dow Jones
The main advantage of trading using opposite Hilton Worldwide and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Hilton Worldwide vs. Alior Bank SA | Hilton Worldwide vs. Sabre Insurance Group | Hilton Worldwide vs. Cincinnati Financial Corp | Hilton Worldwide vs. Prudential Financial |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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