Correlation Between Hyatt Hotels and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Hilton Worldwide 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 Hilton Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Hilton Worldwide Holdings, you can compare the effects of market volatilities on Hyatt Hotels and Hilton Worldwide 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 Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Hilton Worldwide.
Diversification Opportunities for Hyatt Hotels and Hilton Worldwide
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and Hilton is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings 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 Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Hilton Worldwide go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Hilton Worldwide
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 13.52 times less return on investment than Hilton Worldwide. In addition to that, Hyatt Hotels is 2.05 times more volatile than Hilton Worldwide Holdings. It trades about 0.01 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about 0.26 per unit of volatility. If you would invest 23,703 in Hilton Worldwide Holdings on August 27, 2024 and sell it today you would earn a total of 1,597 from holding Hilton Worldwide Holdings or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Hilton Worldwide Holdings
Performance |
| Timeline |
| Hyatt Hotels |
| Hilton Worldwide Holdings |
Hyatt Hotels and Hilton Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Hilton Worldwide
The main advantage of trading using opposite Hyatt Hotels and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide'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 |
| Hilton Worldwide vs. Hyatt Hotels | Hilton Worldwide vs. Wyndham Hotels Resorts | Hilton Worldwide vs. Choice Hotels International | Hilton Worldwide vs. InterContinental Hotels Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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