Correlation Between Host Hotels and Gold Road
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Host Hotels and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Gold Road.
Diversification Opportunities for Host Hotels and Gold Road
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Host and Gold is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Host Hotels i.e., Host Hotels and Gold Road go up and down completely randomly.
Pair Corralation between Host Hotels and Gold Road
Assuming the 90 days horizon Host Hotels Resorts is expected to under-perform the Gold Road. In addition to that, Host Hotels is 1.09 times more volatile than Gold Road Resources. It trades about -0.22 of its total potential returns per unit of risk. Gold Road Resources is currently generating about -0.14 per unit of volatility. If you would invest 130.00 in Gold Road Resources on October 11, 2024 and sell it today you would lose (5.00) from holding Gold Road Resources or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Gold Road Resources
Performance |
| Timeline |
| Host Hotels Resorts |
| Gold Road Resources |
Host Hotels and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Gold Road
The main advantage of trading using opposite Host Hotels and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Host Hotels vs. Suntory Beverage Food | Host Hotels vs. American Public Education | Host Hotels vs. EMBARK EDUCATION LTD | Host Hotels vs. China Resources Beer |
| Gold Road vs. ELECTRONIC ARTS | Gold Road vs. Waste Management | Gold Road vs. CeoTronics AG | Gold Road vs. AGF Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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