Correlation Between Host Hotels and Givaudan
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Givaudan 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 Givaudan 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 Givaudan SA, you can compare the effects of market volatilities on Host Hotels and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Givaudan.
Diversification Opportunities for Host Hotels and Givaudan
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Host and Givaudan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Host Hotels i.e., Host Hotels and Givaudan go up and down completely randomly.
Pair Corralation between Host Hotels and Givaudan
Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 1.33 times more return on investment than Givaudan. However, Host Hotels is 1.33 times more volatile than Givaudan SA. It trades about 0.05 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.04 per unit of risk. If you would invest 1,746 in Host Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 146.00 from holding Host Hotels Resorts or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Host Hotels Resorts vs. Givaudan SA
Performance |
| Timeline |
| Host Hotels Resorts |
| Givaudan SA |
Host Hotels and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Givaudan
The main advantage of trading using opposite Host Hotels and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Hyundai Motor | Host Hotels vs. Reliance Industries Ltd |
| Givaudan vs. Antofagasta PLC | Givaudan vs. Ferrexpo PLC | Givaudan vs. Atalaya Mining | Givaudan vs. Central Asia Metals |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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