Correlation Between Inspired Entertainment and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Inspired Entertainment 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 Inspired Entertainment and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspired Entertainment and Hyatt Hotels, you can compare the effects of market volatilities on Inspired Entertainment 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 Inspired Entertainment with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspired Entertainment and Hyatt Hotels.
Diversification Opportunities for Inspired Entertainment and Hyatt Hotels
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inspired and Hyatt is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Inspired Entertainment 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 Inspired Entertainment 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 Inspired Entertainment i.e., Inspired Entertainment and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Inspired Entertainment and Hyatt Hotels
Given the investment horizon of 90 days Inspired Entertainment is expected to under-perform the Hyatt Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Inspired Entertainment is 1.11 times less risky than Hyatt Hotels. The stock trades about -0.06 of its potential returns per unit of risk. The Hyatt Hotels is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 14,293 in Hyatt Hotels on September 4, 2024 and sell it today you would earn a total of 1,328 from holding Hyatt Hotels or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspired Entertainment vs. Hyatt Hotels
Performance |
| Timeline |
| Inspired Entertainment |
| Hyatt Hotels |
Inspired Entertainment and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspired Entertainment and Hyatt Hotels
The main advantage of trading using opposite Inspired Entertainment and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspired Entertainment 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.| Inspired Entertainment vs. Hyatt Hotels | Inspired Entertainment vs. Smart Share Global | Inspired Entertainment vs. Sweetgreen | Inspired Entertainment vs. Wyndham Hotels Resorts |
| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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