Correlation Between Park Hotels and Bank of America
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Bank of America 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 Park Hotels and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Bank of America, you can compare the effects of market volatilities on Park Hotels and Bank of America 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 Park Hotels with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Bank of America.
Diversification Opportunities for Park Hotels and Bank of America
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Park and Bank is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Park Hotels 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 Park Hotels Resorts are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Park Hotels i.e., Park Hotels and Bank of America go up and down completely randomly.
Pair Corralation between Park Hotels and Bank of America
Allowing for the 90-day total investment horizon Park Hotels is expected to generate 7.13 times less return on investment than Bank of America. In addition to that, Park Hotels is 2.86 times more volatile than Bank of America. It trades about 0.0 of its total potential returns per unit of risk. Bank of America is currently generating about 0.06 per unit of volatility. If you would invest 113,041 in Bank of America on November 5, 2024 and sell it today you would earn a total of 9,359 from holding Bank of America or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Bank of America
Performance |
| Timeline |
| Park Hotels Resorts |
| Bank of America |
Park Hotels and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Bank of America
The main advantage of trading using opposite Park Hotels and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
| Bank of America vs. Encore Capital Group | Bank of America vs. Canaf Investments | Bank of America vs. SEI Investments | Bank of America vs. Bankwell Financial Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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