Correlation Between Lindsell Train and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Host 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 Lindsell Train and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindsell Train Investment and Host Hotels Resorts, you can compare the effects of market volatilities on Lindsell Train and Host 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 Lindsell Train with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Host Hotels.
Diversification Opportunities for Lindsell Train and Host Hotels
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lindsell and Host is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Lindsell Train 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 Lindsell Train Investment are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Lindsell Train i.e., Lindsell Train and Host Hotels go up and down completely randomly.
Pair Corralation between Lindsell Train and Host Hotels
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 1.08 times more return on investment than Host Hotels. However, Lindsell Train is 1.08 times more volatile than Host Hotels Resorts. It trades about 0.37 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.17 per unit of risk. If you would invest 77,600 in Lindsell Train Investment on October 25, 2024 and sell it today you would earn a total of 7,000 from holding Lindsell Train Investment or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. Host Hotels Resorts
Performance |
| Timeline |
| Lindsell Train Investment |
| Host Hotels Resorts |
Lindsell Train and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Host Hotels
The main advantage of trading using opposite Lindsell Train and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Lindsell Train vs. Zoom Video Communications | Lindsell Train vs. Target Healthcare REIT | Lindsell Train vs. CVS Health Corp | Lindsell Train vs. PureTech Health plc |
| Host Hotels vs. Alaska Air Group | Host Hotels vs. EJF Investments | Host Hotels vs. Lindsell Train Investment | Host Hotels vs. Capital Drilling |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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