Correlation Between Host Hotels and Packaging
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Packaging 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 Packaging 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 Packaging of, you can compare the effects of market volatilities on Host Hotels and Packaging 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 Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Packaging.
Diversification Opportunities for Host Hotels and Packaging
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Host and Packaging is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging 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 Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of Host Hotels i.e., Host Hotels and Packaging go up and down completely randomly.
Pair Corralation between Host Hotels and Packaging
Assuming the 90 days horizon Host Hotels is expected to generate 1.57 times less return on investment than Packaging. In addition to that, Host Hotels is 1.53 times more volatile than Packaging of. It trades about 0.15 of its total potential returns per unit of risk. Packaging of is currently generating about 0.36 per unit of volatility. If you would invest 20,850 in Packaging of on August 29, 2024 and sell it today you would earn a total of 2,630 from holding Packaging of or generate 12.61% 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. Packaging of
Performance |
| Timeline |
| Host Hotels Resorts |
| Packaging |
Host Hotels and Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Packaging
The main advantage of trading using opposite Host Hotels and Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Packaging 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 Packaging will offset losses from the drop in Packaging's long position.| Host Hotels vs. CAL MAINE FOODS | Host Hotels vs. Molson Coors Beverage | Host Hotels vs. Astral Foods Limited | Host Hotels vs. Flowers Foods |
| Packaging vs. Host Hotels Resorts | Packaging vs. MIRAMAR HOTEL INV | Packaging vs. COVIVIO HOTELS INH | Packaging vs. InterContinental Hotels Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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