Correlation Between Park Hotels and Beauty Health
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Beauty Health 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 Beauty Health 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 Beauty Health Co, you can compare the effects of market volatilities on Park Hotels and Beauty Health 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 Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Beauty Health.
Diversification Opportunities for Park Hotels and Beauty Health
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Park and Beauty is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Park Hotels i.e., Park Hotels and Beauty Health go up and down completely randomly.
Pair Corralation between Park Hotels and Beauty Health
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.33 times more return on investment than Beauty Health. However, Park Hotels Resorts is 3.08 times less risky than Beauty Health. It trades about 0.03 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.03 per unit of risk. If you would invest 1,130 in Park Hotels Resorts on November 2, 2024 and sell it today you would earn a total of 235.00 from holding Park Hotels Resorts or generate 20.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Park Hotels Resorts vs. Beauty Health Co
Performance |
| Timeline |
| Park Hotels Resorts |
| Beauty Health |
Park Hotels and Beauty Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Beauty Health
The main advantage of trading using opposite Park Hotels and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health'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 |
| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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