Correlation Between Host Hotels and Link Real
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Link Real 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 Link Real 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 Link Real Estate, you can compare the effects of market volatilities on Host Hotels and Link Real 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 Link Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Link Real.
Diversification Opportunities for Host Hotels and Link Real
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Host and Link is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of Host Hotels i.e., Host Hotels and Link Real go up and down completely randomly.
Pair Corralation between Host Hotels and Link Real
Assuming the 90 days horizon Host Hotels is expected to generate 3.82 times less return on investment than Link Real. But when comparing it to its historical volatility, Host Hotels Resorts is 3.58 times less risky than Link Real. It trades about 0.21 of its potential returns per unit of risk. Link Real Estate is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 293.00 in Link Real Estate on September 4, 2024 and sell it today you would earn a total of 122.00 from holding Link Real Estate or generate 41.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Host Hotels Resorts vs. Link Real Estate
Performance |
| Timeline |
| Host Hotels Resorts |
| Link Real Estate |
Host Hotels and Link Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Link Real
The main advantage of trading using opposite Host Hotels and Link Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Link Real 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 Link Real will offset losses from the drop in Link Real's long position.| Host Hotels vs. MOLSON RS BEVERAGE | Host Hotels vs. Zijin Mining Group | Host Hotels vs. Ebro Foods SA | Host Hotels vs. GALENA MINING LTD |
| Link Real vs. Computer And Technologies | Link Real vs. FARO Technologies | Link Real vs. Cogent Communications Holdings | Link Real vs. SK TELECOM TDADR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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