Correlation Between H World and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both H World and Hyatt 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 H World and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H World Group and Hyatt Hotels, you can compare the effects of market volatilities on H World and Hyatt 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 H World with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of H World and Hyatt Hotels.
Diversification Opportunities for H World and Hyatt Hotels
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CL4A and Hyatt is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding H World Group and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and H World 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 H World Group are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of H World i.e., H World and Hyatt Hotels go up and down completely randomly.
Pair Corralation between H World and Hyatt Hotels
Assuming the 90 days trading horizon H World Group is expected to under-perform the Hyatt Hotels. But the stock apears to be less risky and, when comparing its historical volatility, H World Group is 1.09 times less risky than Hyatt Hotels. The stock trades about -0.12 of its potential returns per unit of risk. The Hyatt Hotels is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,375 in Hyatt Hotels on August 28, 2024 and sell it today you would earn a total of 565.00 from holding Hyatt Hotels or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H World Group vs. Hyatt Hotels
Performance |
| Timeline |
| H World Group |
| Hyatt Hotels |
H World and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H World and Hyatt Hotels
The main advantage of trading using opposite H World and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H World position performs unexpectedly, Hyatt 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.The idea behind H World Group and Hyatt Hotels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hyatt Hotels vs. Chesapeake Utilities | Hyatt Hotels vs. MOLSON RS BEVERAGE | Hyatt Hotels vs. BJs Restaurants | Hyatt Hotels vs. Motorcar Parts of |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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