Correlation Between Hyatt Hotels and Moodys
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Moodys 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 Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Moodys, you can compare the effects of market volatilities on Hyatt Hotels and Moodys 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 Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Moodys.
Diversification Opportunities for Hyatt Hotels and Moodys
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and Moodys is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys 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 Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Moodys go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Moodys
Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 1.2 times less return on investment than Moodys. But when comparing it to its historical volatility, Hyatt Hotels is 1.38 times less risky than Moodys. It trades about 0.29 of its potential returns per unit of risk. Moodys is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 41,920 in Moodys on September 5, 2024 and sell it today you would earn a total of 5,630 from holding Moodys or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Moodys
Performance |
| Timeline |
| Hyatt Hotels |
| Moodys |
Hyatt Hotels and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Moodys
The main advantage of trading using opposite Hyatt Hotels and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.| Hyatt Hotels vs. COFCO Joycome Foods | Hyatt Hotels vs. IMAGIN MEDICAL INC | Hyatt Hotels vs. CAL MAINE FOODS | Hyatt Hotels vs. AVITA Medical |
| Moodys vs. Dalata Hotel Group | Moodys vs. Hyatt Hotels | Moodys vs. Wyndham Hotels Resorts | Moodys vs. DALATA HOTEL |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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