Correlation Between Hyatt Hotels and Accor SA
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Accor SA 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 Hyatt Hotels and Accor SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Accor SA, you can compare the effects of market volatilities on Hyatt Hotels and Accor SA 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 Hyatt Hotels with a short position of Accor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Accor SA.
Diversification Opportunities for Hyatt Hotels and Accor SA
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyatt and Accor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Accor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor SA and Hyatt 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 Hyatt Hotels are associated (or correlated) with Accor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor SA has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Accor SA go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Accor SA
Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 1.27 times more return on investment than Accor SA. However, Hyatt Hotels is 1.27 times more volatile than Accor SA. It trades about 0.05 of its potential returns per unit of risk. Accor SA is currently generating about 0.06 per unit of risk. If you would invest 11,417 in Hyatt Hotels on August 25, 2024 and sell it today you would earn a total of 3,158 from holding Hyatt Hotels or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Accor SA
Performance |
| Timeline |
| Hyatt Hotels |
| Accor SA |
Hyatt Hotels and Accor SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Accor SA
The main advantage of trading using opposite Hyatt Hotels and Accor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Accor SA 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 Accor SA will offset losses from the drop in Accor SA's long position.| Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. INTERCONT HOTELS | Hyatt Hotels vs. Accor SA | Hyatt Hotels vs. Choice Hotels International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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