Correlation Between Host Hotels and DEUTSCHE WOHNEN
Can any of the company-specific risk be diversified away by investing in both Host Hotels and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on Host Hotels and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and DEUTSCHE WOHNEN.
Diversification Opportunities for Host Hotels and DEUTSCHE WOHNEN
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Host and DEUTSCHE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of Host Hotels i.e., Host Hotels and DEUTSCHE WOHNEN go up and down completely randomly.
Pair Corralation between Host Hotels and DEUTSCHE WOHNEN
Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.84 times more return on investment than DEUTSCHE WOHNEN. However, Host Hotels Resorts is 1.19 times less risky than DEUTSCHE WOHNEN. It trades about 0.09 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about 0.0 per unit of risk. If you would invest 1,610 in Host Hotels Resorts on September 26, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. DEUTSCHE WOHNEN ADRS12
Performance |
| Timeline |
| Host Hotels Resorts |
| DEUTSCHE WOHNEN ADRS12 |
Host Hotels and DEUTSCHE WOHNEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and DEUTSCHE WOHNEN
The main advantage of trading using opposite Host Hotels and DEUTSCHE WOHNEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN will offset losses from the drop in DEUTSCHE WOHNEN's long position.| Host Hotels vs. Ryman Hospitality Properties | Host Hotels vs. Park Hotels Resorts | Host Hotels vs. Pebblebrook Hotel Trust | Host Hotels vs. Sunstone Hotel Investors |
| DEUTSCHE WOHNEN vs. Host Hotels Resorts | DEUTSCHE WOHNEN vs. Aegean Airlines SA | DEUTSCHE WOHNEN vs. Sunstone Hotel Investors | DEUTSCHE WOHNEN vs. Meli Hotels International |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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