Correlation Between Host Hotels and Global Net
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Host Hotels and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Global Net.
Diversification Opportunities for Host Hotels and Global Net
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Host and Global is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Host Hotels i.e., Host Hotels and Global Net go up and down completely randomly.
Pair Corralation between Host Hotels and Global Net
Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Global Net. But the stock apears to be less risky and, when comparing its historical volatility, Host Hotels Resorts is 1.0 times less risky than Global Net. The stock trades about -0.23 of its potential returns per unit of risk. The Global Net Lease is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 739.00 in Global Net Lease on November 28, 2024 and sell it today you would lose (6.00) from holding Global Net Lease or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Host Hotels Resorts vs. Global Net Lease
Performance |
| Timeline |
| Host Hotels Resorts |
| Global Net Lease |
Host Hotels and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Global Net
The main advantage of trading using opposite Host Hotels and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Host Hotels vs. Wheaton Precious Metals | Host Hotels vs. METALL ZUG AG | Host Hotels vs. Resolute Mining Limited | Host Hotels vs. AfriTin Mining |
| Global Net vs. First Class Metals | Global Net vs. Critical Metals Plc | Global Net vs. Science in Sport | Global Net vs. Solstad Offshore ASA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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