Correlation Between Elementis PLC and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Elementis PLC 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 Elementis PLC and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elementis PLC and Host Hotels Resorts, you can compare the effects of market volatilities on Elementis PLC 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 Elementis PLC with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elementis PLC and Host Hotels.
Diversification Opportunities for Elementis PLC and Host Hotels
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elementis and Host is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elementis PLC 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 Elementis PLC 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 Elementis PLC 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 Elementis PLC i.e., Elementis PLC and Host Hotels go up and down completely randomly.
Pair Corralation between Elementis PLC and Host Hotels
Assuming the 90 days trading horizon Elementis PLC is expected to generate 0.96 times more return on investment than Host Hotels. However, Elementis PLC is 1.05 times less risky than Host Hotels. It trades about 0.0 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.23 per unit of risk. If you would invest 15,400 in Elementis PLC on November 28, 2024 and sell it today you would lose (40.00) from holding Elementis PLC or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elementis PLC vs. Host Hotels Resorts
Performance |
| Timeline |
| Elementis PLC |
| Host Hotels Resorts |
Elementis PLC and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elementis PLC and Host Hotels
The main advantage of trading using opposite Elementis PLC and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elementis PLC 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.| Elementis PLC vs. BlackRock Frontiers Investment | Elementis PLC vs. Monster Beverage Corp | Elementis PLC vs. Southwest Airlines Co | Elementis PLC vs. Scottish American Investment |
| Host Hotels vs. Wheaton Precious Metals | Host Hotels vs. METALL ZUG AG | Host Hotels vs. Resolute Mining Limited | Host 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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