Correlation Between Host Hotels and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Host Hotels and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Host Hotels and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and SWISS WATER.
Diversification Opportunities for Host Hotels and SWISS WATER
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and SWISS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Host Hotels i.e., Host Hotels and SWISS WATER go up and down completely randomly.
Pair Corralation between Host Hotels and SWISS WATER
Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.97 times more return on investment than SWISS WATER. However, Host Hotels Resorts is 1.03 times less risky than SWISS WATER. It trades about 0.15 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.08 per unit of risk. If you would invest 1,610 in Host Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 120.00 from holding Host Hotels Resorts or generate 7.45% 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. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Host Hotels Resorts |
| SWISS WATER DECAFFCOFFEE |
Host Hotels and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and SWISS WATER
The main advantage of trading using opposite Host Hotels and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Host Hotels vs. VIAPLAY GROUP AB | Host Hotels vs. CVW CLEANTECH INC | Host Hotels vs. COLUMBIA SPORTSWEAR | Host Hotels vs. ANTA SPORTS PRODUCT |
| SWISS WATER vs. RYU Apparel | SWISS WATER vs. New Residential Investment | SWISS WATER vs. American Eagle Outfitters | SWISS WATER vs. PennyMac Mortgage Investment |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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