Correlation Between Hilton Worldwide and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and GE Aerospace 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 GE Aerospace 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 GE Aerospace, you can compare the effects of market volatilities on Hilton Worldwide and GE Aerospace 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 GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and GE Aerospace.
Diversification Opportunities for Hilton Worldwide and GE Aerospace
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hilton and GE Aerospace is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace 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 GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and GE Aerospace go up and down completely randomly.
Pair Corralation between Hilton Worldwide and GE Aerospace
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 1.28 times less return on investment than GE Aerospace. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.49 times less risky than GE Aerospace. It trades about 0.13 of its potential returns per unit of risk. GE Aerospace is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,822 in GE Aerospace on September 12, 2024 and sell it today you would earn a total of 8,305 from holding GE Aerospace or generate 94.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. GE Aerospace
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| GE Aerospace |
Hilton Worldwide and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and GE Aerospace
The main advantage of trading using opposite Hilton Worldwide and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, GE Aerospace 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 GE Aerospace will offset losses from the drop in GE Aerospace'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 |
| GE Aerospace vs. Victory Integrity Smallmid Cap | GE Aerospace vs. Hilton Worldwide Holdings | GE Aerospace vs. NVIDIA | GE Aerospace vs. JPMorgan Chase Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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