Correlation Between Host Hotels and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Hilton Food 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 Hilton Food 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 Hilton Food Group, you can compare the effects of market volatilities on Host Hotels and Hilton Food 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 Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Hilton Food.
Diversification Opportunities for Host Hotels and Hilton Food
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Host and Hilton is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Host Hotels i.e., Host Hotels and Hilton Food go up and down completely randomly.
Pair Corralation between Host Hotels and Hilton Food
Assuming the 90 days trading horizon Host Hotels is expected to generate 2.17 times less return on investment than Hilton Food. In addition to that, Host Hotels is 1.16 times more volatile than Hilton Food Group. It trades about 0.03 of its total potential returns per unit of risk. Hilton Food Group is currently generating about 0.08 per unit of volatility. If you would invest 51,530 in Hilton Food Group on August 31, 2024 and sell it today you would earn a total of 39,670 from holding Hilton Food Group or generate 76.98% 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. Hilton Food Group
Performance |
| Timeline |
| Host Hotels Resorts |
| Hilton Food Group |
Host Hotels and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Hilton Food
The main advantage of trading using opposite Host Hotels and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food'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 |
| Hilton Food vs. Impax Environmental Markets | Hilton Food vs. Veolia Environnement VE | Hilton Food vs. United States Steel | Hilton Food vs. Ecclesiastical Insurance Office |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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