Correlation Between HYATT HOTELS and Summit Materials
Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on HYATT HOTELS and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and Summit Materials.
Diversification Opportunities for HYATT HOTELS and Summit Materials
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HYATT and Summit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and Summit Materials go up and down completely randomly.
Pair Corralation between HYATT HOTELS and Summit Materials
Assuming the 90 days trading horizon HYATT HOTELS is expected to generate 5.53 times less return on investment than Summit Materials. In addition to that, HYATT HOTELS is 1.64 times more volatile than Summit Materials. It trades about 0.03 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.25 per unit of volatility. If you would invest 4,780 in Summit Materials on October 9, 2024 and sell it today you would earn a total of 160.00 from holding Summit Materials or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYATT HOTELS A vs. Summit Materials
Performance |
| Timeline |
| HYATT HOTELS A |
| Summit Materials |
HYATT HOTELS and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYATT HOTELS and Summit Materials
The main advantage of trading using opposite HYATT HOTELS and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYATT HOTELS position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| HYATT HOTELS vs. NIGHTINGALE HEALTH EO | HYATT HOTELS vs. OPKO HEALTH | HYATT HOTELS vs. United Utilities Group | HYATT HOTELS vs. MPH Health Care |
| Summit Materials vs. H2O Retailing | Summit Materials vs. BJs Wholesale Club | Summit Materials vs. Strategic Education | Summit Materials vs. FAST RETAIL ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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