Correlation Between Cairn Homes and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Park 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 Cairn Homes and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Park Hotels Resorts, you can compare the effects of market volatilities on Cairn Homes and Park 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 Cairn Homes with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Park Hotels.
Diversification Opportunities for Cairn Homes and Park Hotels
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cairn and Park is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Cairn Homes i.e., Cairn Homes and Park Hotels go up and down completely randomly.
Pair Corralation between Cairn Homes and Park Hotels
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.51 times more return on investment than Park Hotels. However, Cairn Homes PLC is 1.96 times less risky than Park Hotels. It trades about 0.11 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest 6,606 in Cairn Homes PLC on September 1, 2024 and sell it today you would earn a total of 10,494 from holding Cairn Homes PLC or generate 158.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Park Hotels Resorts
Performance |
| Timeline |
| Cairn Homes PLC |
| Park Hotels Resorts |
Cairn Homes and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Park Hotels
The main advantage of trading using opposite Cairn Homes and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Cairn Homes vs. Rightmove PLC | Cairn Homes vs. Bioventix | Cairn Homes vs. VeriSign | Cairn Homes vs. Games Workshop Group |
| Park Hotels vs. Greenroc Mining PLC | Park Hotels vs. CAP LEASE AVIATION | Park Hotels vs. McEwen Mining | Park Hotels vs. AfriTin Mining |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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