Correlation Between Park Hotels and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Balfour Beatty 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 Balfour Beatty 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 Balfour Beatty plc, you can compare the effects of market volatilities on Park Hotels and Balfour Beatty 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 Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Balfour Beatty.
Diversification Opportunities for Park Hotels and Balfour Beatty
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Balfour is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty plc 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 Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of Park Hotels i.e., Park Hotels and Balfour Beatty go up and down completely randomly.
Pair Corralation between Park Hotels and Balfour Beatty
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 1.42 times more return on investment than Balfour Beatty. However, Park Hotels is 1.42 times more volatile than Balfour Beatty plc. It trades about 0.1 of its potential returns per unit of risk. Balfour Beatty plc is currently generating about 0.12 per unit of risk. If you would invest 1,451 in Park Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 99.00 from holding Park Hotels Resorts or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Balfour Beatty plc
Performance |
| Timeline |
| Park Hotels Resorts |
| Balfour Beatty plc |
Park Hotels and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Balfour Beatty
The main advantage of trading using opposite Park Hotels and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| Park Hotels vs. Cornish Metals | Park Hotels vs. Adriatic Metals | Park Hotels vs. Future Metals NL | Park Hotels vs. Empire Metals Limited |
| Balfour Beatty vs. Silvercorp Metals | Balfour Beatty vs. Hochschild Mining plc | Balfour Beatty vs. United States Steel | Balfour Beatty vs. Ironveld 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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