Correlation Between Park Hotels and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Park Hotels and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Arch Capital.
Diversification Opportunities for Park Hotels and Arch Capital
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Arch is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Park Hotels i.e., Park Hotels and Arch Capital go up and down completely randomly.
Pair Corralation between Park Hotels and Arch Capital
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.94 times more return on investment than Arch Capital. However, Park Hotels Resorts is 1.06 times less risky than Arch Capital. It trades about 0.24 of its potential returns per unit of risk. Arch Capital Group is currently generating about 0.07 per unit of risk. If you would invest 1,280 in Park Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 180.00 from holding Park Hotels Resorts or generate 14.06% 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. Arch Capital Group
Performance |
| Timeline |
| Park Hotels Resorts |
| Arch Capital Group |
Park Hotels and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Arch Capital
The main advantage of trading using opposite Park Hotels and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc |
| Arch Capital vs. GRIFFIN MINING LTD | Arch Capital vs. Ross Stores | Arch Capital vs. Fast Retailing Co | Arch Capital vs. Caseys General Stores |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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