Correlation Between European Metals and Host Hotels
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Host Hotels Resorts, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Host Hotels.
Diversification Opportunities for European Metals and Host Hotels
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Host is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and Host Hotels go up and down completely randomly.
Pair Corralation between European Metals and Host Hotels
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 3.27 times more return on investment than Host Hotels. However, European Metals is 3.27 times more volatile than Host Hotels Resorts. It trades about 0.1 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.14 per unit of risk. If you would invest 725.00 in European Metals Holdings on November 3, 2024 and sell it today you would earn a total of 50.00 from holding European Metals Holdings or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
European Metals Holdings vs. Host Hotels Resorts
Performance |
| Timeline |
| European Metals Holdings |
| Host Hotels Resorts |
European Metals and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Host Hotels
The main advantage of trading using opposite European Metals and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Zoom Video Communications | European Metals vs. CNH Industrial NV | European Metals vs. GreenX Metals | European Metals vs. McEwen Mining |
| Host Hotels vs. Erste Group Bank | Host Hotels vs. Moneta Money Bank | Host Hotels vs. Take Two Interactive Software | Host Hotels vs. Software Circle plc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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