Correlation Between Park Hotels and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on Park Hotels and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Digital Realty.
Diversification Opportunities for Park Hotels and Digital Realty
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Digital is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Park Hotels i.e., Park Hotels and Digital Realty go up and down completely randomly.
Pair Corralation between Park Hotels and Digital Realty
Allowing for the 90-day total investment horizon Park Hotels is expected to generate 1.4 times less return on investment than Digital Realty. In addition to that, Park Hotels is 1.07 times more volatile than Digital Realty Trust. It trades about 0.05 of its total potential returns per unit of risk. Digital Realty Trust is currently generating about 0.07 per unit of volatility. If you would invest 9,851 in Digital Realty Trust on November 1, 2024 and sell it today you would earn a total of 6,572 from holding Digital Realty Trust or generate 66.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Digital Realty Trust
Performance |
| Timeline |
| Park Hotels Resorts |
| Digital Realty Trust |
Park Hotels and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Digital Realty
The main advantage of trading using opposite Park Hotels and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty'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 |
| Digital Realty vs. American Tower Corp | Digital Realty vs. Crown Castle | Digital Realty vs. Iron Mountain Incorporated | Digital Realty vs. SBA Communications Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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