Correlation Between Park Hotels and Great West
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Great West 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 Great West 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 Great West Lifeco, you can compare the effects of market volatilities on Park Hotels and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Great West.
Diversification Opportunities for Park Hotels and Great West
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Great is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Park Hotels i.e., Park Hotels and Great West go up and down completely randomly.
Pair Corralation between Park Hotels and Great West
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 1.78 times more return on investment than Great West. However, Park Hotels is 1.78 times more volatile than Great West Lifeco. It trades about 0.03 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.05 per unit of risk. If you would invest 1,299 in Park Hotels Resorts on September 14, 2024 and sell it today you would earn a total of 161.00 from holding Park Hotels Resorts or generate 12.39% 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. Great West Lifeco
Performance |
| Timeline |
| Park Hotels Resorts |
| Great West Lifeco |
Park Hotels and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Great West
The main advantage of trading using opposite Park Hotels and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Park Hotels vs. BOS BETTER ONLINE | Park Hotels vs. ScanSource | Park Hotels vs. JAPAN TOBACCO UNSPADR12 | Park Hotels vs. YATRA ONLINE DL 0001 |
| Great West vs. CyberArk Software | Great West vs. Corsair Gaming | Great West vs. Check Point Software | Great West vs. VITEC SOFTWARE GROUP |
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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