Correlation Between IMPERIAL TOBACCO and Park Hotels
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Park 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 IMPERIAL TOBACCO and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Park Hotels Resorts, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Park 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 IMPERIAL TOBACCO with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Park Hotels.
Diversification Opportunities for IMPERIAL TOBACCO and Park Hotels
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IMPERIAL and Park is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Park Hotels go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Park Hotels
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.48 times more return on investment than Park Hotels. However, IMPERIAL TOBACCO is 2.07 times less risky than Park Hotels. It trades about 0.26 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.07 per unit of risk. If you would invest 2,779 in IMPERIAL TOBACCO on November 1, 2024 and sell it today you would earn a total of 409.00 from holding IMPERIAL TOBACCO or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Park Hotels Resorts
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Park Hotels Resorts |
IMPERIAL TOBACCO and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Park Hotels
The main advantage of trading using opposite IMPERIAL TOBACCO and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| IMPERIAL TOBACCO vs. Inspire Medical Systems | IMPERIAL TOBACCO vs. Compugroup Medical SE | IMPERIAL TOBACCO vs. CVR Medical Corp | IMPERIAL TOBACCO vs. Avanos Medical |
| Park Hotels vs. Host Hotels Resorts | Park Hotels vs. Sunstone Hotel Investors | Park Hotels vs. Xenia Hotels Resorts | Park Hotels vs. Summit Hotel Properties |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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