Correlation Between HYATT HOTELS and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on HYATT HOTELS and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and Aristocrat Leisure.
Diversification Opportunities for HYATT HOTELS and Aristocrat Leisure
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HYATT and Aristocrat is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between HYATT HOTELS and Aristocrat Leisure
Assuming the 90 days trading horizon HYATT HOTELS A is expected to under-perform the Aristocrat Leisure. But the stock apears to be less risky and, when comparing its historical volatility, HYATT HOTELS A is 1.17 times less risky than Aristocrat Leisure. The stock trades about -0.15 of its potential returns per unit of risk. The Aristocrat Leisure Limited is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,140 in Aristocrat Leisure Limited on October 28, 2024 and sell it today you would lose (60.00) from holding Aristocrat Leisure Limited or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYATT HOTELS A vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| HYATT HOTELS A |
| Aristocrat Leisure |
HYATT HOTELS and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYATT HOTELS and Aristocrat Leisure
The main advantage of trading using opposite HYATT HOTELS and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYATT HOTELS position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| HYATT HOTELS vs. Insurance Australia Group | HYATT HOTELS vs. DeVry Education Group | HYATT HOTELS vs. Xinhua Winshare Publishing | HYATT HOTELS vs. HANOVER INSURANCE |
| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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