Correlation Between VIVA WINE and HYATT HOTELS-A
Can any of the company-specific risk be diversified away by investing in both VIVA WINE and HYATT HOTELS-A 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 VIVA WINE and HYATT HOTELS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and HYATT HOTELS A, you can compare the effects of market volatilities on VIVA WINE and HYATT HOTELS-A 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 VIVA WINE with a short position of HYATT HOTELS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and HYATT HOTELS-A.
Diversification Opportunities for VIVA WINE and HYATT HOTELS-A
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VIVA and HYATT is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP 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 VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with HYATT HOTELS-A. 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 VIVA WINE i.e., VIVA WINE and HYATT HOTELS-A go up and down completely randomly.
Pair Corralation between VIVA WINE and HYATT HOTELS-A
Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 2.92 times more return on investment than HYATT HOTELS-A. However, VIVA WINE is 2.92 times more volatile than HYATT HOTELS A. It trades about 0.08 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.09 per unit of risk. If you would invest 163.00 in VIVA WINE GROUP on August 26, 2024 and sell it today you would earn a total of 180.00 from holding VIVA WINE GROUP or generate 110.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. HYATT HOTELS A
Performance |
| Timeline |
| VIVA WINE GROUP |
| HYATT HOTELS A |
VIVA WINE and HYATT HOTELS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and HYATT HOTELS-A
The main advantage of trading using opposite VIVA WINE and HYATT HOTELS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE position performs unexpectedly, HYATT HOTELS-A 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-A will offset losses from the drop in HYATT HOTELS-A's long position.The idea behind VIVA WINE GROUP and HYATT HOTELS A 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-A vs. TreeHouse Foods | HYATT HOTELS-A vs. Austevoll Seafood ASA | HYATT HOTELS-A vs. MCEWEN MINING INC | HYATT HOTELS-A vs. Cal Maine Foods |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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