Correlation Between Hilton Worldwide and Alamo
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Alamo 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 Hilton Worldwide and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Alamo Group, you can compare the effects of market volatilities on Hilton Worldwide and Alamo 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 Hilton Worldwide with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Alamo.
Diversification Opportunities for Hilton Worldwide and Alamo
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilton and Alamo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Hilton Worldwide 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 Hilton Worldwide Holdings are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Alamo go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Alamo
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 1.18 times less return on investment than Alamo. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.91 times less risky than Alamo. It trades about 0.17 of its potential returns per unit of risk. Alamo Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,856 in Alamo Group on September 13, 2024 and sell it today you would earn a total of 1,678 from holding Alamo Group or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Alamo Group
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Alamo Group |
Hilton Worldwide and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Alamo
The main advantage of trading using opposite Hilton Worldwide and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip Limited |
| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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