Correlation Between HYATT HOTELS and SOLENO THERAPEUT
Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and SOLENO THERAPEUT 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 SOLENO THERAPEUT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYATT HOTELS A and SOLENO THERAPEUT DL 001, you can compare the effects of market volatilities on HYATT HOTELS and SOLENO THERAPEUT 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 SOLENO THERAPEUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and SOLENO THERAPEUT.
Diversification Opportunities for HYATT HOTELS and SOLENO THERAPEUT
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HYATT and SOLENO is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and SOLENO THERAPEUT DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLENO THERAPEUT 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 A are associated (or correlated) with SOLENO THERAPEUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLENO THERAPEUT has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and SOLENO THERAPEUT go up and down completely randomly.
Pair Corralation between HYATT HOTELS and SOLENO THERAPEUT
Assuming the 90 days trading horizon HYATT HOTELS A is expected to generate 0.52 times more return on investment than SOLENO THERAPEUT. However, HYATT HOTELS A is 1.94 times less risky than SOLENO THERAPEUT. It trades about 0.12 of its potential returns per unit of risk. SOLENO THERAPEUT DL 001 is currently generating about 0.02 per unit of risk. If you would invest 13,092 in HYATT HOTELS A on September 12, 2024 and sell it today you would earn a total of 1,953 from holding HYATT HOTELS A or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
HYATT HOTELS A vs. SOLENO THERAPEUT DL 001
Performance |
| Timeline |
| HYATT HOTELS A |
| SOLENO THERAPEUT |
HYATT HOTELS and SOLENO THERAPEUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYATT HOTELS and SOLENO THERAPEUT
The main advantage of trading using opposite HYATT HOTELS and SOLENO THERAPEUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYATT HOTELS position performs unexpectedly, SOLENO THERAPEUT 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 SOLENO THERAPEUT will offset losses from the drop in SOLENO THERAPEUT's long position.| HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc |
| SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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