Correlation Between JAPAN AIRLINES and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and HYATT HOTELS A, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and HYATT HOTELS.
Diversification Opportunities for JAPAN AIRLINES and HYATT HOTELS
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and HYATT is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and JAPAN AIRLINES 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 JAPAN AIRLINES 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 A has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and HYATT HOTELS go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and HYATT HOTELS
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 1.4 times less return on investment than HYATT HOTELS. But when comparing it to its historical volatility, JAPAN AIRLINES is 1.4 times less risky than HYATT HOTELS. It trades about 0.24 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 13,406 in HYATT HOTELS A on September 2, 2024 and sell it today you would earn a total of 1,429 from holding HYATT HOTELS A or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. HYATT HOTELS A
Performance |
| Timeline |
| JAPAN AIRLINES |
| HYATT HOTELS A |
JAPAN AIRLINES and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and HYATT HOTELS
The main advantage of trading using opposite JAPAN AIRLINES and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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's long position.| JAPAN AIRLINES vs. SIVERS SEMICONDUCTORS AB | JAPAN AIRLINES vs. Darden Restaurants | JAPAN AIRLINES vs. Reliance Steel Aluminum | JAPAN AIRLINES vs. Q2M Managementberatung AG |
| HYATT HOTELS vs. Cal Maine Foods | HYATT HOTELS vs. Performance Food Group | HYATT HOTELS vs. Aegean Airlines SA | HYATT HOTELS vs. JAPAN AIRLINES |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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