Correlation Between Hyatt Hotels and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and ECD Automotive 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 Hyatt Hotels and ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and ECD Automotive Design, you can compare the effects of market volatilities on Hyatt Hotels and ECD Automotive 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 Hyatt Hotels with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and ECD Automotive.
Diversification Opportunities for Hyatt Hotels and ECD Automotive
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyatt and ECD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design and Hyatt Hotels 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 Hyatt Hotels are associated (or correlated) with ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and ECD Automotive go up and down completely randomly.
Pair Corralation between Hyatt Hotels and ECD Automotive
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 2.03 times less return on investment than ECD Automotive. But when comparing it to its historical volatility, Hyatt Hotels is 7.96 times less risky than ECD Automotive. It trades about 0.06 of its potential returns per unit of risk. ECD Automotive Design is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2.48 in ECD Automotive Design on August 25, 2024 and sell it today you would lose (0.19) from holding ECD Automotive Design or give up 7.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.43% |
| Values | Daily Returns |
Hyatt Hotels vs. ECD Automotive Design
Performance |
| Timeline |
| Hyatt Hotels |
| ECD Automotive Design |
Hyatt Hotels and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and ECD Automotive
The main advantage of trading using opposite Hyatt Hotels and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
| ECD Automotive vs. Live Ventures | ECD Automotive vs. LGI Homes | ECD Automotive vs. Addus HomeCare | ECD Automotive vs. Western Digital |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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