Correlation Between Chatham Lodging and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Chatham Lodging 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 Chatham Lodging and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chatham Lodging Trust and Host Hotels Resorts, you can compare the effects of market volatilities on Chatham Lodging 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 Chatham Lodging with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chatham Lodging and Host Hotels.
Diversification Opportunities for Chatham Lodging and Host Hotels
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chatham and Host is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chatham Lodging Trust 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 Chatham Lodging 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 Chatham Lodging Trust 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 Chatham Lodging i.e., Chatham Lodging and Host Hotels go up and down completely randomly.
Pair Corralation between Chatham Lodging and Host Hotels
Given the investment horizon of 90 days Chatham Lodging Trust is expected to generate 2.23 times more return on investment than Host Hotels. However, Chatham Lodging is 2.23 times more volatile than Host Hotels Resorts. It trades about 0.29 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.25 per unit of risk. If you would invest 786.00 in Chatham Lodging Trust on September 2, 2024 and sell it today you would earn a total of 135.00 from holding Chatham Lodging Trust or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chatham Lodging Trust vs. Host Hotels Resorts
Performance |
| Timeline |
| Chatham Lodging Trust |
| Host Hotels Resorts |
Chatham Lodging and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chatham Lodging and Host Hotels
The main advantage of trading using opposite Chatham Lodging and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chatham Lodging 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.| Chatham Lodging vs. Summit Hotel Properties | Chatham Lodging vs. RLJ Lodging Trust | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Whitestone REIT |
| Host Hotels vs. Service Properties Trust | Host Hotels vs. Diamondrock Hospitality | Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Ryman Hospitality Properties |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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