Correlation Between Host Hotels and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both Host Hotels and SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES, you can compare the effects of market volatilities on Host Hotels and SPARTAN STORES 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 SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and SPARTAN STORES.
Diversification Opportunities for Host Hotels and SPARTAN STORES
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Host and SPARTAN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Host Hotels i.e., Host Hotels and SPARTAN STORES go up and down completely randomly.
Pair Corralation between Host Hotels and SPARTAN STORES
Assuming the 90 days horizon Host Hotels Resorts is expected to under-perform the SPARTAN STORES. But the stock apears to be less risky and, when comparing its historical volatility, Host Hotels Resorts is 1.74 times less risky than SPARTAN STORES. The stock trades about -0.18 of its potential returns per unit of risk. The SPARTAN STORES is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,730 in SPARTAN STORES on November 30, 2024 and sell it today you would earn a total of 180.00 from holding SPARTAN STORES or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. SPARTAN STORES
Performance |
| Timeline |
| Host Hotels Resorts |
| SPARTAN STORES |
Host Hotels and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and SPARTAN STORES
The main advantage of trading using opposite Host Hotels and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| Host Hotels vs. ULTRA CLEAN HLDGS | Host Hotels vs. Summit Hotel Properties | Host Hotels vs. CVW CLEANTECH INC | Host Hotels vs. SIDETRADE EO 1 |
| SPARTAN STORES vs. Playtech plc | SPARTAN STORES vs. GLG LIFE TECH | SPARTAN STORES vs. ePlay Digital | SPARTAN STORES vs. Gaming and Leisure |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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