Correlation Between Host Hotels and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both Host Hotels and DELTA AIR 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 DELTA AIR 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 DELTA AIR LINES, you can compare the effects of market volatilities on Host Hotels and DELTA AIR 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 DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and DELTA AIR.
Diversification Opportunities for Host Hotels and DELTA AIR
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Host and DELTA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and DELTA AIR LINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELTA AIR LINES 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 DELTA AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELTA AIR LINES has no effect on the direction of Host Hotels i.e., Host Hotels and DELTA AIR go up and down completely randomly.
Pair Corralation between Host Hotels and DELTA AIR
Assuming the 90 days horizon Host Hotels is expected to generate 2.45 times less return on investment than DELTA AIR. But when comparing it to its historical volatility, Host Hotels Resorts is 1.26 times less risky than DELTA AIR. It trades about 0.15 of its potential returns per unit of risk. DELTA AIR LINES is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,130 in DELTA AIR LINES on August 29, 2024 and sell it today you would earn a total of 1,015 from holding DELTA AIR LINES or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. DELTA AIR LINES
Performance |
| Timeline |
| Host Hotels Resorts |
| DELTA AIR LINES |
Host Hotels and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and DELTA AIR
The main advantage of trading using opposite Host Hotels and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, DELTA AIR 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 DELTA AIR will offset losses from the drop in DELTA AIR'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 |
| DELTA AIR vs. FUYO GENERAL LEASE | DELTA AIR vs. Sixt Leasing SE | DELTA AIR vs. ALBIS LEASING AG | DELTA AIR vs. Gol Intelligent Airlines |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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