Correlation Between FPX Nickel and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both FPX Nickel 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 FPX Nickel and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPX Nickel Corp and Hyatt Hotels, you can compare the effects of market volatilities on FPX Nickel 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 FPX Nickel with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and Hyatt Hotels.
Diversification Opportunities for FPX Nickel and Hyatt Hotels
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FPX and Hyatt is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and FPX Nickel 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 FPX Nickel Corp 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 FPX Nickel i.e., FPX Nickel and Hyatt Hotels go up and down completely randomly.
Pair Corralation between FPX Nickel and Hyatt Hotels
Assuming the 90 days horizon FPX Nickel is expected to generate 2.65 times less return on investment than Hyatt Hotels. In addition to that, FPX Nickel is 3.06 times more volatile than Hyatt Hotels. It trades about 0.01 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.07 per unit of volatility. If you would invest 13,681 in Hyatt Hotels on September 2, 2024 and sell it today you would earn a total of 1,044 from holding Hyatt Hotels or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPX Nickel Corp vs. Hyatt Hotels
Performance |
| Timeline |
| FPX Nickel Corp |
| Hyatt Hotels |
FPX Nickel and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPX Nickel and Hyatt Hotels
The main advantage of trading using opposite FPX Nickel and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPX Nickel 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.The idea behind FPX Nickel Corp and Hyatt Hotels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hyatt Hotels vs. ALGOMA STEEL GROUP | Hyatt Hotels vs. NXP Semiconductors NV | Hyatt Hotels vs. Caltagirone SpA | Hyatt Hotels vs. Elmos Semiconductor SE |
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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