Correlation Between Hyatt Hotels and Honda
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Honda 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 Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Honda Motor Co, you can compare the effects of market volatilities on Hyatt Hotels and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Honda.
Diversification Opportunities for Hyatt Hotels and Honda
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyatt and Honda is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Honda go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Honda
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.1 times more return on investment than Honda. However, Hyatt Hotels is 1.1 times more volatile than Honda Motor Co. It trades about 0.05 of its potential returns per unit of risk. Honda Motor Co is currently generating about -0.19 per unit of risk. If you would invest 14,899 in Hyatt Hotels on August 31, 2024 and sell it today you would earn a total of 712.00 from holding Hyatt Hotels or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Honda Motor Co
Performance |
| Timeline |
| Hyatt Hotels |
| Honda Motor |
Hyatt Hotels and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Honda
The main advantage of trading using opposite Hyatt Hotels and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda'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 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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