Correlation Between Air Lease and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Air Lease 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 Air Lease and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Host Hotels Resorts, you can compare the effects of market volatilities on Air Lease 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 Air Lease with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Host Hotels.
Diversification Opportunities for Air Lease and Host Hotels
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Host is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease 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 Air Lease 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 Air Lease 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 Air Lease i.e., Air Lease and Host Hotels go up and down completely randomly.
Pair Corralation between Air Lease and Host Hotels
Assuming the 90 days trading horizon Air Lease is expected to generate 0.88 times more return on investment than Host Hotels. However, Air Lease is 1.13 times less risky than Host Hotels. It trades about 0.39 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.14 per unit of risk. If you would invest 4,120 in Air Lease on August 28, 2024 and sell it today you would earn a total of 720.00 from holding Air Lease or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Air Lease vs. Host Hotels Resorts
Performance |
| Timeline |
| Air Lease |
| Host Hotels Resorts |
Air Lease and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Host Hotels
The main advantage of trading using opposite Air Lease and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease 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.| Air Lease vs. Superior Plus Corp | Air Lease vs. NMI Holdings | Air Lease vs. Origin Agritech | Air Lease vs. SIVERS SEMICONDUCTORS AB |
| Host Hotels vs. VIAPLAY GROUP AB | Host Hotels vs. CVW CLEANTECH INC | Host Hotels vs. COLUMBIA SPORTSWEAR | Host Hotels vs. ANTA SPORTS PRODUCT |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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