Correlation Between Life Time and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Hyatt Hotels, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Hyatt Hotels.
Diversification Opportunities for Life Time and Hyatt Hotels
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and Hyatt is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Life Time 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 Life Time Group 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 Life Time i.e., Life Time and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Life Time and Hyatt Hotels
Considering the 90-day investment horizon Life Time is expected to generate 1.49 times less return on investment than Hyatt Hotels. But when comparing it to its historical volatility, Life Time Group is 1.16 times less risky than Hyatt Hotels. It trades about 0.18 of its potential returns per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Hyatt Hotels
Performance |
| Timeline |
| Life Time Group |
| Hyatt Hotels |
Life Time and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Hyatt Hotels
The main advantage of trading using opposite Life Time and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Hyatt Hotels | Life Time vs. Smart Share Global | Life Time vs. Sweetgreen | Life Time 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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