Correlation Between Park Hotels and Greencoat
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Greencoat 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 Greencoat 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 Greencoat UK Wind, you can compare the effects of market volatilities on Park Hotels and Greencoat 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 Greencoat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Greencoat.
Diversification Opportunities for Park Hotels and Greencoat
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Greencoat is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Greencoat UK Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat UK Wind 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 Greencoat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat UK Wind has no effect on the direction of Park Hotels i.e., Park Hotels and Greencoat go up and down completely randomly.
Pair Corralation between Park Hotels and Greencoat
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.63 times more return on investment than Greencoat. However, Park Hotels Resorts is 1.58 times less risky than Greencoat. It trades about 0.16 of its potential returns per unit of risk. Greencoat UK Wind is currently generating about -0.02 per unit of risk. If you would invest 1,197 in Park Hotels Resorts on September 12, 2024 and sell it today you would earn a total of 273.00 from holding Park Hotels Resorts or generate 22.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Greencoat UK Wind
Performance |
| Timeline |
| Park Hotels Resorts |
| Greencoat UK Wind |
Park Hotels and Greencoat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Greencoat
The main advantage of trading using opposite Park Hotels and Greencoat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Greencoat 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 Greencoat will offset losses from the drop in Greencoat's long position.| Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc |
| Greencoat vs. National Storage Affiliates | Greencoat vs. TYSON FOODS A | Greencoat vs. Data3 Limited | Greencoat vs. PUBLIC STORAGE PRFO |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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