Correlation Between Park Hotels and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Park Hotels and ECD Automotive 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 ECD Automotive 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 ECD Automotive Design, you can compare the effects of market volatilities on Park Hotels and ECD Automotive 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 ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and ECD Automotive.
Diversification Opportunities for Park Hotels and ECD Automotive
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Park and ECD is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Park Hotels i.e., Park Hotels and ECD Automotive go up and down completely randomly.
Pair Corralation between Park Hotels and ECD Automotive
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.08 times more return on investment than ECD Automotive. However, Park Hotels Resorts is 12.07 times less risky than ECD Automotive. It trades about 0.13 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.04 per unit of risk. If you would invest 1,497 in Park Hotels Resorts on September 12, 2024 and sell it today you would earn a total of 64.00 from holding Park Hotels Resorts or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
Park Hotels Resorts vs. ECD Automotive Design
Performance |
| Timeline |
| Park Hotels Resorts |
| ECD Automotive Design |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Park Hotels and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and ECD Automotive
The main advantage of trading using opposite Park Hotels and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive'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 |
| ECD Automotive vs. GMS Inc | ECD Automotive vs. Copa Holdings SA | ECD Automotive vs. JetBlue Airways Corp | ECD Automotive vs. Olympic Steel |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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