Correlation Between Microsoft and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HYATT HOTELS A, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HYATT HOTELS.
Diversification Opportunities for Microsoft and HYATT HOTELS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and HYATT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 A has no effect on the direction of Microsoft i.e., Microsoft and HYATT HOTELS go up and down completely randomly.
Pair Corralation between Microsoft and HYATT HOTELS
Assuming the 90 days trading horizon Microsoft is expected to generate 1.23 times less return on investment than HYATT HOTELS. But when comparing it to its historical volatility, Microsoft is 1.31 times less risky than HYATT HOTELS. It trades about 0.06 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,563 in HYATT HOTELS A on August 31, 2024 and sell it today you would earn a total of 4,272 from holding HYATT HOTELS A or generate 40.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. HYATT HOTELS A
Performance |
| Timeline |
| Microsoft |
| HYATT HOTELS A |
Microsoft and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HYATT HOTELS
The main advantage of trading using opposite Microsoft and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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's long position.| Microsoft vs. PLAYTIKA HOLDING DL 01 | Microsoft vs. Apollo Investment Corp | Microsoft vs. MGIC INVESTMENT | Microsoft vs. LG Display Co |
| HYATT HOTELS vs. SIVERS SEMICONDUCTORS AB | HYATT HOTELS vs. Darden Restaurants | HYATT HOTELS vs. Reliance Steel Aluminum | HYATT HOTELS vs. Q2M Managementberatung AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |