Correlation Between Park Hotels and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Franklin Street 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 Franklin Street 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 Franklin Street Properties, you can compare the effects of market volatilities on Park Hotels and Franklin Street 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 Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Franklin Street.
Diversification Opportunities for Park Hotels and Franklin Street
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Franklin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop 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 Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of Park Hotels i.e., Park Hotels and Franklin Street go up and down completely randomly.
Pair Corralation between Park Hotels and Franklin Street
Allowing for the 90-day total investment horizon Park Hotels is expected to generate 21.09 times less return on investment than Franklin Street. But when comparing it to its historical volatility, Park Hotels Resorts is 1.79 times less risky than Franklin Street. It trades about 0.01 of its potential returns per unit of risk. Franklin Street Properties is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Franklin Street Properties on October 14, 2024 and sell it today you would earn a total of 16.00 from holding Franklin Street Properties or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Franklin Street Properties
Performance |
| Timeline |
| Park Hotels Resorts |
| Franklin Street Prop |
Park Hotels and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Franklin Street
The main advantage of trading using opposite Park Hotels and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Franklin Street 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 Franklin Street will offset losses from the drop in Franklin Street'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 |
| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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