Correlation Between Hilton Worldwide and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Caterpillar 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 Caterpillar 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 Caterpillar, you can compare the effects of market volatilities on Hilton Worldwide and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Caterpillar.
Diversification Opportunities for Hilton Worldwide and Caterpillar
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilton and Caterpillar is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Caterpillar go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Caterpillar
Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to generate 0.9 times more return on investment than Caterpillar. However, Hilton Worldwide Holdings is 1.11 times less risky than Caterpillar. It trades about 0.12 of its potential returns per unit of risk. Caterpillar is currently generating about -0.1 per unit of risk. If you would invest 25,045 in Hilton Worldwide Holdings on September 13, 2024 and sell it today you would earn a total of 650.00 from holding Hilton Worldwide Holdings or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Caterpillar
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Caterpillar |
Hilton Worldwide and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Caterpillar
The main advantage of trading using opposite Hilton Worldwide and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip Limited |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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