Correlation Between Park Hotels and Office Properties
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Office Properties 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 Office Properties 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 Office Properties Income, you can compare the effects of market volatilities on Park Hotels and Office Properties 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Office Properties.
Diversification Opportunities for Park Hotels and Office Properties
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Office is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of Park Hotels i.e., Park Hotels and Office Properties go up and down completely randomly.
Pair Corralation between Park Hotels and Office Properties
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.38 times more return on investment than Office Properties. However, Park Hotels Resorts is 2.6 times less risky than Office Properties. It trades about 0.27 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.07 per unit of risk. If you would invest 1,396 in Park Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 154.00 from holding Park Hotels Resorts or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Office Properties Income
Performance |
| Timeline |
| Park Hotels Resorts |
| Office Properties Income |
Park Hotels and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Office Properties
The main advantage of trading using opposite Park Hotels and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Office Properties 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 Office Properties will offset losses from the drop in Office Properties' 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 |
| Office Properties vs. Realty Income | Office Properties vs. First Industrial Realty | Office Properties vs. Healthcare Realty Trust | Office Properties vs. Park Hotels Resorts |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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