Correlation Between Host Hotels and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Charter Communications 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 Host Hotels and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Charter Communications Cl, you can compare the effects of market volatilities on Host Hotels and Charter Communications 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 Host Hotels with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Charter Communications.
Diversification Opportunities for Host Hotels and Charter Communications
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Host and Charter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Host Hotels i.e., Host Hotels and Charter Communications go up and down completely randomly.
Pair Corralation between Host Hotels and Charter Communications
Assuming the 90 days trading horizon Host Hotels is expected to generate 1.67 times less return on investment than Charter Communications. But when comparing it to its historical volatility, Host Hotels Resorts is 1.44 times less risky than Charter Communications. It trades about 0.03 of its potential returns per unit of risk. Charter Communications Cl is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 33,064 in Charter Communications Cl on September 2, 2024 and sell it today you would earn a total of 6,331 from holding Charter Communications Cl or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.64% |
| Values | Daily Returns |
Host Hotels Resorts vs. Charter Communications Cl
Performance |
| Timeline |
| Host Hotels Resorts |
| Charter Communications |
Host Hotels and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Charter Communications
The main advantage of trading using opposite Host Hotels and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Host Hotels vs. Uniper SE | Host Hotels vs. Mulberry Group PLC | Host Hotels vs. London Security Plc | Host Hotels vs. Triad Group PLC |
| Charter Communications vs. Uniper SE | Charter Communications vs. Mulberry Group PLC | Charter Communications vs. London Security Plc | Charter Communications vs. Triad Group PLC |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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