Correlation Between Hyatt Hotels and McDonalds
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and McDonalds 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 McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and McDonalds, you can compare the effects of market volatilities on Hyatt Hotels and McDonalds 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 McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and McDonalds.
Diversification Opportunities for Hyatt Hotels and McDonalds
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hyatt and McDonalds is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds 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 McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and McDonalds go up and down completely randomly.
Pair Corralation between Hyatt Hotels and McDonalds
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.82 times more return on investment than McDonalds. However, Hyatt Hotels is 1.82 times more volatile than McDonalds. It trades about 0.04 of its potential returns per unit of risk. McDonalds is currently generating about 0.02 per unit of risk. If you would invest 15,727 in Hyatt Hotels on September 12, 2024 and sell it today you would earn a total of 195.00 from holding Hyatt Hotels or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. McDonalds
Performance |
| Timeline |
| Hyatt Hotels |
| McDonalds |
Hyatt Hotels and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and McDonalds
The main advantage of trading using opposite Hyatt Hotels and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, McDonalds 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 McDonalds will offset losses from the drop in McDonalds' long position.| Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Hilton Worldwide Holdings | Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. Choice Hotels International |
| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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