Correlation Between Fidelity Sustainable and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Fidelity Sustainable 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 Fidelity Sustainable and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Sustainable USD and Host Hotels Resorts, you can compare the effects of market volatilities on Fidelity Sustainable 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 Fidelity Sustainable with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and Host Hotels.
Diversification Opportunities for Fidelity Sustainable and Host Hotels
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fidelity and Host is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable USD 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 Fidelity Sustainable 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 Fidelity Sustainable USD 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 Fidelity Sustainable i.e., Fidelity Sustainable and Host Hotels go up and down completely randomly.
Pair Corralation between Fidelity Sustainable and Host Hotels
Assuming the 90 days trading horizon Fidelity Sustainable is expected to generate 7.7 times less return on investment than Host Hotels. But when comparing it to its historical volatility, Fidelity Sustainable USD is 3.19 times less risky than Host Hotels. It trades about 0.04 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,787 in Host Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 105.00 from holding Host Hotels Resorts or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Sustainable USD vs. Host Hotels Resorts
Performance |
| Timeline |
| Fidelity Sustainable USD |
| Host Hotels Resorts |
Fidelity Sustainable and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Sustainable and Host Hotels
The main advantage of trading using opposite Fidelity Sustainable and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sustainable 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.The idea behind Fidelity Sustainable USD and Host Hotels Resorts 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.
| Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Hyundai Motor | Host Hotels vs. Reliance Industries Ltd |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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