Correlation Between Travel Leisure and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Travel Leisure and Host Hotels 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 Travel Leisure and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travel Leisure Co and Host Hotels Resorts, you can compare the effects of market volatilities on Travel Leisure and Host Hotels 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 Travel Leisure with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel Leisure and Host Hotels.
Diversification Opportunities for Travel Leisure and Host Hotels
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travel and Host is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Travel Leisure 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 Travel Leisure Co are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Travel Leisure i.e., Travel Leisure and Host Hotels go up and down completely randomly.
Pair Corralation between Travel Leisure and Host Hotels
Assuming the 90 days trading horizon Travel Leisure Co is expected to generate 1.76 times more return on investment than Host Hotels. However, Travel Leisure is 1.76 times more volatile than Host Hotels Resorts. It trades about 0.02 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.09 per unit of risk. If you would invest 5,765 in Travel Leisure Co on November 7, 2024 and sell it today you would earn a total of 50.00 from holding Travel Leisure Co or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Travel Leisure Co vs. Host Hotels Resorts
Performance |
| Timeline |
| Travel Leisure |
| Host Hotels Resorts |
Travel Leisure and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travel Leisure and Host Hotels
The main advantage of trading using opposite Travel Leisure and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Travel Leisure vs. Fevertree Drinks Plc | Travel Leisure vs. Herald Investment Trust | Travel Leisure vs. Mobius Investment Trust | Travel Leisure vs. BlackRock Frontiers Investment |
| Host Hotels vs. St Galler Kantonalbank | Host Hotels vs. Alfa Financial Software | Host Hotels vs. Moneta Money Bank | Host Hotels vs. Cembra Money Bank |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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