Correlation Between Host Hotels and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on Host Hotels and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Trainline Plc.
Diversification Opportunities for Host Hotels and Trainline Plc
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Host and Trainline is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Host Hotels i.e., Host Hotels and Trainline Plc go up and down completely randomly.
Pair Corralation between Host Hotels and Trainline Plc
Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Trainline Plc. In addition to that, Host Hotels is 1.1 times more volatile than Trainline Plc. It trades about -0.35 of its total potential returns per unit of risk. Trainline Plc is currently generating about -0.32 per unit of volatility. If you would invest 43,480 in Trainline Plc on October 13, 2024 and sell it today you would lose (3,880) from holding Trainline Plc or give up 8.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Trainline Plc
Performance |
| Timeline |
| Host Hotels Resorts |
| Trainline Plc |
Host Hotels and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Trainline Plc
The main advantage of trading using opposite Host Hotels and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| Host Hotels vs. Morgan Advanced Materials | Host Hotels vs. JB Hunt Transport | Host Hotels vs. Europa Metals | Host Hotels vs. Capital Metals PLC |
| Trainline Plc vs. Dalata Hotel Group | Trainline Plc vs. British American Tobacco | Trainline Plc vs. Host Hotels Resorts | Trainline Plc 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.
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