Correlation Between Park Hotels and Service Properties
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Service Properties 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 Park Hotels and Service Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Service Properties Trust, you can compare the effects of market volatilities on Park Hotels and Service Properties 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 Park Hotels with a short position of Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Service Properties.
Diversification Opportunities for Park Hotels and Service Properties
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Park and Service is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust and Park 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 Park Hotels Resorts are associated (or correlated) with Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Park Hotels i.e., Park Hotels and Service Properties go up and down completely randomly.
Pair Corralation between Park Hotels and Service Properties
Assuming the 90 days horizon Park Hotels Resorts is expected to generate 0.54 times more return on investment than Service Properties. However, Park Hotels Resorts is 1.85 times less risky than Service Properties. It trades about 0.11 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.05 per unit of risk. If you would invest 1,420 in Park Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 60.00 from holding Park Hotels Resorts or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Service Properties Trust
Performance |
| Timeline |
| Park Hotels Resorts |
| Service Properties Trust |
Park Hotels and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Service Properties
The main advantage of trading using opposite Park Hotels and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' long position.| Park Hotels vs. CARSALESCOM | Park Hotels vs. Tradeweb Markets | Park Hotels vs. USWE SPORTS AB | Park Hotels vs. Universal Display |
| Service Properties vs. Westinghouse Air Brake | Service Properties vs. Fair Isaac Corp | Service Properties vs. Pentair plc | Service Properties vs. Direct Line Insurance |
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 CEOs Directory module to screen CEOs from public companies around the world.
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