Correlation Between Gaming Realms and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Host Hotels Resorts, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Host Hotels.
Diversification Opportunities for Gaming Realms and Host Hotels
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaming and Host is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms 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 Gaming Realms 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 Gaming Realms 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 Gaming Realms i.e., Gaming Realms and Host Hotels go up and down completely randomly.
Pair Corralation between Gaming Realms and Host Hotels
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 1.29 times more return on investment than Host Hotels. However, Gaming Realms is 1.29 times more volatile than Host Hotels Resorts. It trades about 0.04 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.02 per unit of risk. If you would invest 2,500 in Gaming Realms plc on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Gaming Realms plc or generate 48.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.98% |
| Values | Daily Returns |
Gaming Realms plc vs. Host Hotels Resorts
Performance |
| Timeline |
| Gaming Realms plc |
| Host Hotels Resorts |
Gaming Realms and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Host Hotels
The main advantage of trading using opposite Gaming Realms and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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.| Gaming Realms vs. Ondine Biomedical | Gaming Realms vs. Europa Metals | Gaming Realms vs. Lendinvest PLC | Gaming Realms vs. Neometals |
| Host Hotels vs. Lendinvest PLC | Host Hotels vs. Neometals | Host Hotels vs. Albion Technology General | Host Hotels vs. Jupiter Fund Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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