Correlation Between HYATT HOTELS and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and EDISON INTL 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 EDISON INTL 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 EDISON INTL, you can compare the effects of market volatilities on HYATT HOTELS and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and EDISON INTL.
Diversification Opportunities for HYATT HOTELS and EDISON INTL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HYATT and EDISON is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and EDISON INTL go up and down completely randomly.
Pair Corralation between HYATT HOTELS and EDISON INTL
Assuming the 90 days trading horizon HYATT HOTELS A is expected to generate 1.48 times more return on investment than EDISON INTL. However, HYATT HOTELS is 1.48 times more volatile than EDISON INTL. It trades about 0.09 of its potential returns per unit of risk. EDISON INTL is currently generating about 0.1 per unit of risk. If you would invest 10,375 in HYATT HOTELS A on September 14, 2024 and sell it today you would earn a total of 4,875 from holding HYATT HOTELS A or generate 46.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
HYATT HOTELS A vs. EDISON INTL
Performance |
| Timeline |
| HYATT HOTELS A |
| EDISON INTL |
HYATT HOTELS and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYATT HOTELS and EDISON INTL
The main advantage of trading using opposite HYATT HOTELS and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYATT HOTELS position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc | HYATT HOTELS vs. Apple Inc |
| EDISON INTL vs. Choice Hotels International | EDISON INTL vs. Cleanaway Waste Management | EDISON INTL vs. ULTRA CLEAN HLDGS | EDISON INTL vs. HYATT HOTELS A |
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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