Correlation Between Hilton Worldwide and BT Brands
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and BT Brands 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 BT Brands 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 BT Brands Warrant, you can compare the effects of market volatilities on Hilton Worldwide and BT Brands 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 BT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and BT Brands.
Diversification Opportunities for Hilton Worldwide and BT Brands
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hilton and BTBDW is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and BT Brands Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Brands Warrant 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 BT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Brands Warrant has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and BT Brands go up and down completely randomly.
Pair Corralation between Hilton Worldwide and BT Brands
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 17.95 times less return on investment than BT Brands. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 40.98 times less risky than BT Brands. It trades about 0.24 of its potential returns per unit of risk. BT Brands Warrant is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9.25 in BT Brands Warrant on November 1, 2024 and sell it today you would lose (1.25) from holding BT Brands Warrant or give up 13.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. BT Brands Warrant
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| BT Brands Warrant |
Hilton Worldwide and BT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and BT Brands
The main advantage of trading using opposite Hilton Worldwide and BT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, BT Brands 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 BT Brands will offset losses from the drop in BT Brands' long position.| Hilton Worldwide vs. Hyatt Hotels | Hilton Worldwide vs. Wyndham Hotels Resorts | Hilton Worldwide vs. Choice Hotels International | Hilton Worldwide vs. InterContinental Hotels 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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