Correlation Between Park Hotels and AES Corp
Can any of the company-specific risk be diversified away by investing in both Park Hotels and AES Corp 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 Park Hotels and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and AES Corp, you can compare the effects of market volatilities on Park Hotels and AES Corp 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 Park Hotels with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and AES Corp.
Diversification Opportunities for Park Hotels and AES Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and AES is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Park 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 Park Hotels Resorts are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Park Hotels i.e., Park Hotels and AES Corp go up and down completely randomly.
Pair Corralation between Park Hotels and AES Corp
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.77 times more return on investment than AES Corp. However, Park Hotels Resorts is 1.3 times less risky than AES Corp. It trades about 0.02 of its potential returns per unit of risk. AES Corp is currently generating about -0.13 per unit of risk. If you would invest 1,484 in Park Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 52.00 from holding Park Hotels Resorts or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. AES Corp
Performance |
| Timeline |
| Park Hotels Resorts |
| AES Corp |
Park Hotels and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and AES Corp
The main advantage of trading using opposite Park Hotels and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Park Hotels vs. JD Sports Fashion | Park Hotels vs. Vitec Software Group | Park Hotels vs. Alliance Data Systems | Park Hotels vs. Ion Beam Applications |
| AES Corp vs. MTI Wireless Edge | AES Corp vs. Applied Materials | AES Corp vs. Jacquet Metal Service | AES Corp vs. Southern Copper Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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