Correlation Between Hyatt Hotels and United Parks
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and United Parks Resorts, you can compare the effects of market volatilities on Hyatt Hotels and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and United Parks.
Diversification Opportunities for Hyatt Hotels and United Parks
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and United Parks go up and down completely randomly.
Pair Corralation between Hyatt Hotels and United Parks
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 0.9 times more return on investment than United Parks. However, Hyatt Hotels is 1.12 times less risky than United Parks. It trades about 0.08 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.0 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 414.00 from holding Hyatt Hotels or generate 2.63% 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. United Parks Resorts
Performance |
| Timeline |
| Hyatt Hotels |
| United Parks Resorts |
Hyatt Hotels and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and United Parks
The main advantage of trading using opposite Hyatt Hotels and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Hilton Worldwide Holdings | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Huazhu Group |
| United Parks vs. Corsair Gaming | United Parks vs. Sonida Senior Living | United Parks vs. Omni Health | United Parks vs. RadNet Inc |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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