Correlation Between Hilton Worldwide and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Canadian Imperial 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 Canadian Imperial 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 Canadian Imperial Bank, you can compare the effects of market volatilities on Hilton Worldwide and Canadian Imperial 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 Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Canadian Imperial.
Diversification Opportunities for Hilton Worldwide and Canadian Imperial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hilton and Canadian is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank 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 Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Canadian Imperial go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Canadian Imperial
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 2.08 times less return on investment than Canadian Imperial. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.1 times less risky than Canadian Imperial. It trades about 0.07 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,451 in Canadian Imperial Bank on September 12, 2024 and sell it today you would earn a total of 197.00 from holding Canadian Imperial Bank or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Canadian Imperial Bank
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Canadian Imperial Bank |
Hilton Worldwide and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Canadian Imperial
The main advantage of trading using opposite Hilton Worldwide and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's 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 |
| Canadian Imperial vs. Bank of America | Canadian Imperial vs. Victory Integrity Smallmid Cap | Canadian Imperial vs. Hilton Worldwide Holdings | Canadian Imperial vs. NVIDIA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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