Correlation Between Host Hotels and Toyota
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Toyota 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 Toyota 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 Toyota Motor Corp, you can compare the effects of market volatilities on Host Hotels and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Toyota.
Diversification Opportunities for Host Hotels and Toyota
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Host and Toyota is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Host Hotels i.e., Host Hotels and Toyota go up and down completely randomly.
Pair Corralation between Host Hotels and Toyota
Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 1.12 times more return on investment than Toyota. However, Host Hotels is 1.12 times more volatile than Toyota Motor Corp. It trades about 0.13 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about -0.04 per unit of risk. If you would invest 1,820 in Host Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 72.00 from holding Host Hotels Resorts or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Toyota Motor Corp
Performance |
| Timeline |
| Host Hotels Resorts |
| Toyota Motor Corp |
Host Hotels and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Toyota
The main advantage of trading using opposite Host Hotels and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Hyundai Motor | Host Hotels vs. Reliance Industries Ltd |
| Toyota vs. Wizz Air Holdings | Toyota vs. Tyson Foods Cl | Toyota vs. Delta Air Lines | Toyota vs. Ebro Foods |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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