Correlation Between Hyatt Hotels and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Norwegian Air 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 Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Norwegian Air Shuttle, you can compare the effects of market volatilities on Hyatt Hotels and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Norwegian Air.
Diversification Opportunities for Hyatt Hotels and Norwegian Air
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyatt and Norwegian is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Norwegian Air go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Norwegian Air
Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 0.43 times more return on investment than Norwegian Air. However, Hyatt Hotels is 2.35 times less risky than Norwegian Air. It trades about -0.1 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.07 per unit of risk. If you would invest 15,165 in Hyatt Hotels on November 1, 2024 and sell it today you would lose (320.00) from holding Hyatt Hotels or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Hyatt Hotels |
| Norwegian Air Shuttle |
Hyatt Hotels and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Norwegian Air
The main advantage of trading using opposite Hyatt Hotels and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Hyatt Hotels vs. Playa Hotels Resorts | Hyatt Hotels vs. TRAVEL LEISURE DL 01 | Hyatt Hotels vs. Suntory Beverage Food | Hyatt Hotels vs. COLUMBIA SPORTSWEAR |
| Norwegian Air vs. Xenia Hotels Resorts | Norwegian Air vs. Wyndham Hotels Resorts | Norwegian Air vs. Meli Hotels International | Norwegian Air vs. Hyatt Hotels |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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