Correlation Between INTERCONT HOTELS and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Hyatt Hotels 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 INTERCONT HOTELS and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Hyatt Hotels, you can compare the effects of market volatilities on INTERCONT HOTELS and Hyatt Hotels 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 INTERCONT HOTELS with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Hyatt Hotels.
Diversification Opportunities for INTERCONT HOTELS and Hyatt Hotels
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INTERCONT and Hyatt is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and INTERCONT 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 INTERCONT HOTELS are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Hyatt Hotels go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and Hyatt Hotels
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 1.14 times more return on investment than Hyatt Hotels. However, INTERCONT HOTELS is 1.14 times more volatile than Hyatt Hotels. It trades about 0.21 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.1 per unit of risk. If you would invest 8,946 in INTERCONT HOTELS on August 28, 2024 and sell it today you would earn a total of 2,654 from holding INTERCONT HOTELS or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. Hyatt Hotels
Performance |
| Timeline |
| INTERCONT HOTELS |
| Hyatt Hotels |
INTERCONT HOTELS and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and Hyatt Hotels
The main advantage of trading using opposite INTERCONT HOTELS and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.The idea behind INTERCONT HOTELS and Hyatt Hotels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hyatt Hotels vs. Chesapeake Utilities | Hyatt Hotels vs. MOLSON RS BEVERAGE | Hyatt Hotels vs. BJs Restaurants | Hyatt Hotels vs. Motorcar Parts of |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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