Correlation Between FAT Brands and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both FAT Brands 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 FAT Brands and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Hyatt Hotels, you can compare the effects of market volatilities on FAT Brands 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 FAT Brands with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Hyatt Hotels.
Diversification Opportunities for FAT Brands and Hyatt Hotels
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAT and Hyatt is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and FAT Brands 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 FAT Brands 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 FAT Brands i.e., FAT Brands and Hyatt Hotels go up and down completely randomly.
Pair Corralation between FAT Brands and Hyatt Hotels
Assuming the 90 days horizon FAT Brands is expected to generate 1.97 times less return on investment than Hyatt Hotels. In addition to that, FAT Brands is 1.72 times more volatile than Hyatt Hotels. It trades about 0.07 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.22 per unit of volatility. If you would invest 14,293 in Hyatt Hotels on September 4, 2024 and sell it today you would earn a total of 1,328 from holding Hyatt Hotels or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Hyatt Hotels
Performance |
| Timeline |
| FAT Brands |
| Hyatt Hotels |
FAT Brands and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Hyatt Hotels
The main advantage of trading using opposite FAT Brands and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands 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.| FAT Brands vs. Hyatt Hotels | FAT Brands vs. Smart Share Global | FAT Brands vs. Sweetgreen | FAT Brands vs. Wyndham Hotels Resorts |
| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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