Correlation Between Host Hotels and CAP LEASE
Can any of the company-specific risk be diversified away by investing in both Host Hotels and CAP LEASE 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 CAP LEASE 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 CAP LEASE AVIATION, you can compare the effects of market volatilities on Host Hotels and CAP LEASE 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 CAP LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and CAP LEASE.
Diversification Opportunities for Host Hotels and CAP LEASE
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Host and CAP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Host Hotels i.e., Host Hotels and CAP LEASE go up and down completely randomly.
Pair Corralation between Host Hotels and CAP LEASE
Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the CAP LEASE. But the stock apears to be less risky and, when comparing its historical volatility, Host Hotels Resorts is 3.67 times less risky than CAP LEASE. The stock trades about -0.23 of its potential returns per unit of risk. The CAP LEASE AVIATION is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 50.00 in CAP LEASE AVIATION on November 28, 2024 and sell it today you would earn a total of 9.00 from holding CAP LEASE AVIATION or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Host Hotels Resorts vs. CAP LEASE AVIATION
Performance |
| Timeline |
| Host Hotels Resorts |
| CAP LEASE AVIATION |
Host Hotels and CAP LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and CAP LEASE
The main advantage of trading using opposite Host Hotels and CAP LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, CAP LEASE 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 CAP LEASE will offset losses from the drop in CAP LEASE'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 |
| CAP LEASE vs. Arrow Electronics | CAP LEASE vs. Solstad Offshore ASA | CAP LEASE vs. Ruffer Investment | CAP LEASE vs. Kinnevik Investment AB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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