Correlation Between Halma Plc and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Halma Plc and Park Hotels 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 Halma Plc and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and Park Hotels Resorts, you can compare the effects of market volatilities on Halma Plc and Park Hotels 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 Halma Plc with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Park Hotels.
Diversification Opportunities for Halma Plc and Park Hotels
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Halma and Park is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Halma Plc 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 Halma plc are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Halma Plc i.e., Halma Plc and Park Hotels go up and down completely randomly.
Pair Corralation between Halma Plc and Park Hotels
Assuming the 90 days horizon Halma plc is expected to generate 0.73 times more return on investment than Park Hotels. However, Halma plc is 1.37 times less risky than Park Hotels. It trades about -0.1 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.08 per unit of risk. If you would invest 3,277 in Halma plc on October 17, 2024 and sell it today you would lose (105.00) from holding Halma plc or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halma plc vs. Park Hotels Resorts
Performance |
| Timeline |
| Halma plc |
| Park Hotels Resorts |
Halma Plc and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and Park Hotels
The main advantage of trading using opposite Halma Plc and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
| Park Hotels vs. ELECTRONIC ARTS | Park Hotels vs. Molina Healthcare | Park Hotels vs. Cardinal Health | Park Hotels vs. Electronic Arts |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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