Correlation Between Hilton Worldwide and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Travel Leisure 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 Travel Leisure 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 Travel Leisure Co, you can compare the effects of market volatilities on Hilton Worldwide and Travel Leisure 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 Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Travel Leisure.
Diversification Opportunities for Hilton Worldwide and Travel Leisure
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilton and Travel is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure 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 Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Travel Leisure go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Travel Leisure
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 1.73 times less return on investment than Travel Leisure. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.27 times less risky than Travel Leisure. It trades about 0.12 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,811 in Travel Leisure Co on November 1, 2024 and sell it today you would earn a total of 744.50 from holding Travel Leisure Co or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Travel Leisure Co
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Travel Leisure |
Hilton Worldwide and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Travel Leisure
The main advantage of trading using opposite Hilton Worldwide and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Travel Leisure 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 Travel Leisure will offset losses from the drop in Travel Leisure'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 |
| Travel Leisure vs. Yatra Online | Travel Leisure vs. Despegar Corp | Travel Leisure vs. Lindblad Expeditions Holdings | Travel Leisure vs. Expedia 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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