Correlation Between Park Hotels and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Halma Plc 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 Halma Plc 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 Halma plc, you can compare the effects of market volatilities on Park Hotels and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Halma Plc.
Diversification Opportunities for Park Hotels and Halma Plc
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Park and Halma is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Park Hotels i.e., Park Hotels and Halma Plc go up and down completely randomly.
Pair Corralation between Park Hotels and Halma Plc
Assuming the 90 days trading horizon Park Hotels Resorts is expected to under-perform the Halma Plc. In addition to that, Park Hotels is 1.37 times more volatile than Halma plc. It trades about -0.08 of its total potential returns per unit of risk. Halma plc is currently generating about -0.1 per unit of volatility. If you would invest 3,277 in Halma plc on October 17, 2024 and sell it today you would lose (105.00) from holding Halma plc or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Halma plc
Performance |
| Timeline |
| Park Hotels Resorts |
| Halma plc |
Park Hotels and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Halma Plc
The main advantage of trading using opposite Park Hotels and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| Park Hotels vs. ELECTRONIC ARTS | Park Hotels vs. Molina Healthcare | Park Hotels vs. Cardinal Health | Park Hotels vs. Electronic Arts |
| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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