Correlation Between Park Hotels and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Park Hotels and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Premier Foods.
Diversification Opportunities for Park Hotels and Premier Foods
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Park and Premier is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Park Hotels i.e., Park Hotels and Premier Foods go up and down completely randomly.
Pair Corralation between Park Hotels and Premier Foods
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 1.39 times more return on investment than Premier Foods. However, Park Hotels is 1.39 times more volatile than Premier Foods PLC. It trades about 0.13 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 per unit of risk. If you would invest 1,419 in Park Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Park Hotels Resorts or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Premier Foods PLC
Performance |
| Timeline |
| Park Hotels Resorts |
| Premier Foods PLC |
Park Hotels and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Premier Foods
The main advantage of trading using opposite Park Hotels and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Park Hotels vs. Neometals | Park Hotels vs. Coor Service Management | Park Hotels vs. Aeorema Communications Plc | Park Hotels vs. JLEN Environmental Assets |
| Premier Foods vs. MediaZest plc | Premier Foods vs. One Media iP | Premier Foods vs. Flutter Entertainment PLC | Premier Foods vs. Catalyst Media Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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