Correlation Between Host Hotels and Auckland International
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Host Hotels and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Auckland International.
Diversification Opportunities for Host Hotels and Auckland International
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Host and Auckland is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Host Hotels i.e., Host Hotels and Auckland International go up and down completely randomly.
Pair Corralation between Host Hotels and Auckland International
Assuming the 90 days horizon Host Hotels is expected to generate 2.7 times less return on investment than Auckland International. But when comparing it to its historical volatility, Host Hotels Resorts is 1.68 times less risky than Auckland International. It trades about 0.16 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 386.00 in Auckland International Airport on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Auckland International Airport or generate 13.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Auckland International Airport
Performance |
| Timeline |
| Host Hotels Resorts |
| Auckland International |
Host Hotels and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Auckland International
The main advantage of trading using opposite Host Hotels and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Xenia Hotels Resorts | Host Hotels vs. Summit Hotel Properties | Host Hotels vs. ASHFORD HOSPITTRUST |
| Auckland International vs. Aena SME SA | Auckland International vs. Superior Plus Corp | Auckland International vs. SIVERS SEMICONDUCTORS AB | Auckland International vs. Norsk Hydro ASA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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