Correlation Between Life Time and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Park 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 Park Hotels Resorts, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Park Hotels.
Diversification Opportunities for Life Time and Park Hotels
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Park is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group 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 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 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 Life Time i.e., Life Time and Park Hotels go up and down completely randomly.
Pair Corralation between Life Time and Park Hotels
Considering the 90-day investment horizon Life Time is expected to generate 1.12 times less return on investment than Park Hotels. In addition to that, Life Time is 1.4 times more volatile than Park Hotels Resorts. It trades about 0.03 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.05 per unit of volatility. If you would invest 1,151 in Park Hotels Resorts on September 4, 2024 and sell it today you would earn a total of 387.00 from holding Park Hotels Resorts or generate 33.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Park Hotels Resorts
Performance |
| Timeline |
| Life Time Group |
| Park Hotels Resorts |
Life Time and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Park Hotels
The main advantage of trading using opposite Life Time and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Hyatt Hotels | Life Time vs. Smart Share Global | Life Time vs. Sweetgreen | Life Time vs. Wyndham Hotels Resorts |
| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
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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