Correlation Between Host Hotels and Broadridge Financial
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Broadridge Financial 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 Host Hotels and Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Broadridge Financial Solutions, you can compare the effects of market volatilities on Host Hotels and Broadridge Financial 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 Host Hotels with a short position of Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Broadridge Financial.
Diversification Opportunities for Host Hotels and Broadridge Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and Broadridge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Host Hotels i.e., Host Hotels and Broadridge Financial go up and down completely randomly.
Pair Corralation between Host Hotels and Broadridge Financial
Assuming the 90 days horizon Host Hotels is expected to generate 2.18 times less return on investment than Broadridge Financial. In addition to that, Host Hotels is 1.38 times more volatile than Broadridge Financial Solutions. It trades about 0.03 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.09 per unit of volatility. If you would invest 19,433 in Broadridge Financial Solutions on October 26, 2024 and sell it today you would earn a total of 2,967 from holding Broadridge Financial Solutions or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Broadridge Financial Solutions
Performance |
| Timeline |
| Host Hotels Resorts |
| Broadridge Financial |
Host Hotels and Broadridge Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Broadridge Financial
The main advantage of trading using opposite Host Hotels and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Broadridge Financial 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 Broadridge Financial will offset losses from the drop in Broadridge Financial's long position.| Host Hotels vs. DFS Furniture PLC | Host Hotels vs. Aedas Homes SA | Host Hotels vs. American Homes 4 | Host Hotels vs. Haverty Furniture Companies |
| Broadridge Financial vs. SUN LIFE FINANCIAL | Broadridge Financial vs. ARDAGH METAL PACDL 0001 | Broadridge Financial vs. Harmony Gold Mining | Broadridge Financial vs. Perseus Mining Limited |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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