Correlation Between Hilton Food and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Hilton Food and Host 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 Hilton Food and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Host Hotels Resorts, you can compare the effects of market volatilities on Hilton Food and Host 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 Hilton Food with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Host Hotels.
Diversification Opportunities for Hilton Food and Host Hotels
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hilton and Host is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Hilton Food 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 Hilton Food Group are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Hilton Food i.e., Hilton Food and Host Hotels go up and down completely randomly.
Pair Corralation between Hilton Food and Host Hotels
Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.86 times more return on investment than Host Hotels. However, Hilton Food Group is 1.16 times less risky than Host Hotels. It trades about 0.08 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest 51,530 in Hilton Food Group on August 31, 2024 and sell it today you would earn a total of 39,670 from holding Hilton Food Group or generate 76.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Hilton Food Group vs. Host Hotels Resorts
Performance |
| Timeline |
| Hilton Food Group |
| Host Hotels Resorts |
Hilton Food and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Host Hotels
The main advantage of trading using opposite Hilton Food and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Hilton Food vs. Impax Environmental Markets | Hilton Food vs. Veolia Environnement VE | Hilton Food vs. United States Steel | Hilton Food vs. Ecclesiastical Insurance Office |
| Host Hotels vs. Neometals | Host Hotels vs. Coor Service Management | Host Hotels vs. Aeorema Communications Plc | Host Hotels vs. JLEN Environmental Assets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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