Correlation Between MEDICAL FACILITIES and Host Hotels
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Host Hotels 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 MEDICAL FACILITIES and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Host Hotels Resorts, you can compare the effects of market volatilities on MEDICAL FACILITIES and Host Hotels 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 MEDICAL FACILITIES with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Host Hotels.
Diversification Opportunities for MEDICAL FACILITIES and Host Hotels
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MEDICAL and Host is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Host Hotels go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Host Hotels
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.79 times more return on investment than Host Hotels. However, MEDICAL FACILITIES is 1.79 times more volatile than Host Hotels Resorts. It trades about 0.09 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.05 per unit of risk. If you would invest 578.00 in MEDICAL FACILITIES NEW on September 4, 2024 and sell it today you would earn a total of 512.00 from holding MEDICAL FACILITIES NEW or generate 88.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Host Hotels Resorts
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Host Hotels Resorts |
MEDICAL FACILITIES and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Host Hotels
The main advantage of trading using opposite MEDICAL FACILITIES and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| MEDICAL FACILITIES vs. Superior Plus Corp | MEDICAL FACILITIES vs. NMI Holdings | MEDICAL FACILITIES vs. Origin Agritech | MEDICAL FACILITIES vs. SIVERS SEMICONDUCTORS AB |
| Host Hotels vs. MOLSON RS BEVERAGE | Host Hotels vs. Zijin Mining Group | Host Hotels vs. Ebro Foods SA | Host Hotels vs. GALENA MINING LTD |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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