Correlation Between Park Hotels and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Xenia 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 Park Hotels and Xenia Hotels 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 Xenia Hotels Resorts, you can compare the effects of market volatilities on Park Hotels and Xenia 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 Park Hotels with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Xenia Hotels.
Diversification Opportunities for Park Hotels and Xenia Hotels
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Xenia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Park Hotels i.e., Park Hotels and Xenia Hotels go up and down completely randomly.
Pair Corralation between Park Hotels and Xenia Hotels
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 1.14 times more return on investment than Xenia Hotels. However, Park Hotels is 1.14 times more volatile than Xenia Hotels Resorts. It trades about 0.2 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.14 per unit of risk. If you would invest 1,270 in Park Hotels Resorts on August 26, 2024 and sell it today you would earn a total of 150.00 from holding Park Hotels Resorts or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Xenia Hotels Resorts
Performance |
| Timeline |
| Park Hotels Resorts |
| Xenia Hotels Resorts |
Park Hotels and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Xenia Hotels
The main advantage of trading using opposite Park Hotels and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Xenia 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. ASHFORD HOSPITTRUST |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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