Correlation Between Hilton Worldwide and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean Cruises, you can compare the effects of market volatilities on Hilton Worldwide and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Royal Caribbean.
Diversification Opportunities for Hilton Worldwide and Royal Caribbean
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hilton and Royal is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Royal Caribbean Cruises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Cruises 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Cruises has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Royal Caribbean go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Royal Caribbean
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 2.65 times less return on investment than Royal Caribbean. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.92 times less risky than Royal Caribbean. It trades about 0.26 of its potential returns per unit of risk. Royal Caribbean Cruises is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 20,352 in Royal Caribbean Cruises on August 27, 2024 and sell it today you would earn a total of 3,797 from holding Royal Caribbean Cruises or generate 18.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hilton Worldwide Holdings vs. Royal Caribbean Cruises
Performance |
Timeline |
Hilton Worldwide Holdings |
Royal Caribbean Cruises |
Hilton Worldwide and Royal Caribbean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hilton Worldwide and Royal Caribbean
The main advantage of trading using opposite Hilton Worldwide and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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