Correlation Between MIRAMAR HOTEL and Host Hotels
Can any of the company-specific risk be diversified away by investing in both MIRAMAR HOTEL 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 MIRAMAR HOTEL and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIRAMAR HOTEL INV and Host Hotels Resorts, you can compare the effects of market volatilities on MIRAMAR HOTEL 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 MIRAMAR HOTEL with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRAMAR HOTEL and Host Hotels.
Diversification Opportunities for MIRAMAR HOTEL and Host Hotels
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MIRAMAR and Host is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MIRAMAR HOTEL INV 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 MIRAMAR HOTEL 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 MIRAMAR HOTEL INV 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 MIRAMAR HOTEL i.e., MIRAMAR HOTEL and Host Hotels go up and down completely randomly.
Pair Corralation between MIRAMAR HOTEL and Host Hotels
Assuming the 90 days trading horizon MIRAMAR HOTEL is expected to generate 3.27 times less return on investment than Host Hotels. But when comparing it to its historical volatility, MIRAMAR HOTEL INV is 3.87 times less risky than Host Hotels. It trades about 0.07 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,580 in Host Hotels Resorts on August 25, 2024 and sell it today you would earn a total of 40.00 from holding Host Hotels Resorts or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MIRAMAR HOTEL INV vs. Host Hotels Resorts
Performance |
| Timeline |
| MIRAMAR HOTEL INV |
| Host Hotels Resorts |
MIRAMAR HOTEL and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIRAMAR HOTEL and Host Hotels
The main advantage of trading using opposite MIRAMAR HOTEL and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIRAMAR HOTEL 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.| MIRAMAR HOTEL vs. Apple Inc | MIRAMAR HOTEL vs. Apple Inc | MIRAMAR HOTEL vs. Apple Inc | MIRAMAR HOTEL vs. Apple Inc |
| Host Hotels vs. DELTA AIR LINES | Host Hotels vs. Tower One Wireless | Host Hotels vs. Altair Engineering | Host Hotels vs. 24SEVENOFFICE GROUP AB |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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