Correlation Between CATLIN GROUP and Host Hotels
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Host Hotels Resorts, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Host Hotels.
Diversification Opportunities for CATLIN GROUP and Host Hotels
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CATLIN and Host is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Host Hotels go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Host Hotels
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.21 times more return on investment than Host Hotels. However, CATLIN GROUP is 1.21 times more volatile than Host Hotels Resorts. It trades about 0.06 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.02 per unit of risk. If you would invest 7,500 in CATLIN GROUP on September 4, 2024 and sell it today you would earn a total of 1,900 from holding CATLIN GROUP or generate 25.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CATLIN GROUP vs. Host Hotels Resorts
Performance |
| Timeline |
| CATLIN GROUP |
| Host Hotels Resorts |
CATLIN GROUP and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Host Hotels
The main advantage of trading using opposite CATLIN GROUP and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. Tungsten West PLC | CATLIN GROUP vs. Versarien PLC | CATLIN GROUP vs. Quantum Blockchain Technologies | CATLIN GROUP vs. Malvern International |
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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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