Correlation Between Host Hotels and Associated British
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Host Hotels and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Associated British.
Diversification Opportunities for Host Hotels and Associated British
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Host and Associated is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Host Hotels i.e., Host Hotels and Associated British go up and down completely randomly.
Pair Corralation between Host Hotels and Associated British
Assuming the 90 days trading horizon Host Hotels is expected to generate 1.03 times less return on investment than Associated British. In addition to that, Host Hotels is 1.45 times more volatile than Associated British Foods. It trades about 0.03 of its total potential returns per unit of risk. Associated British Foods is currently generating about 0.05 per unit of volatility. If you would invest 169,058 in Associated British Foods on August 31, 2024 and sell it today you would earn a total of 49,942 from holding Associated British Foods or generate 29.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Host Hotels Resorts vs. Associated British Foods
Performance |
| Timeline |
| Host Hotels Resorts |
| Associated British Foods |
Host Hotels and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Associated British
The main advantage of trading using opposite Host Hotels and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Host Hotels vs. Neometals | Host Hotels vs. Coor Service Management | Host Hotels vs. Aeorema Communications Plc | Host Hotels vs. JLEN Environmental Assets |
| Associated British vs. Aeorema Communications Plc | Associated British vs. British American Tobacco | Associated British vs. Induction Healthcare Group | Associated British vs. Optima Health 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |