Correlation Between Host Hotels and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Host Hotels and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Auto Trader.
Diversification Opportunities for Host Hotels and Auto Trader
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Host and Auto is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Host Hotels i.e., Host Hotels and Auto Trader go up and down completely randomly.
Pair Corralation between Host Hotels and Auto Trader
Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 1.34 times more return on investment than Auto Trader. However, Host Hotels is 1.34 times more volatile than Auto Trader Group. It trades about 0.03 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.02 per unit of risk. If you would invest 1,766 in Host Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 67.00 from holding Host Hotels Resorts or generate 3.79% 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. Auto Trader Group
Performance |
| Timeline |
| Host Hotels Resorts |
| Auto Trader Group |
Host Hotels and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Auto Trader
The main advantage of trading using opposite Host Hotels and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Host Hotels vs. Catalyst Media Group | Host Hotels vs. CATLIN GROUP | Host Hotels vs. RTW Venture Fund | Host Hotels vs. Secure Property Development |
| Auto Trader vs. Applied Materials | Auto Trader vs. Evolution Gaming Group | Auto Trader vs. Air Products Chemicals | Auto Trader vs. Omega Healthcare Investors |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |