Correlation Between Park Hotels and Torm PLC
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Torm PLC 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 Torm PLC 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 Torm PLC Class, you can compare the effects of market volatilities on Park Hotels and Torm PLC 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 Torm PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Torm PLC.
Diversification Opportunities for Park Hotels and Torm PLC
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Torm is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Torm PLC Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torm PLC Class 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 Torm PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torm PLC Class has no effect on the direction of Park Hotels i.e., Park Hotels and Torm PLC go up and down completely randomly.
Pair Corralation between Park Hotels and Torm PLC
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.68 times more return on investment than Torm PLC. However, Park Hotels Resorts is 1.46 times less risky than Torm PLC. It trades about 0.25 of its potential returns per unit of risk. Torm PLC Class is currently generating about -0.25 per unit of risk. If you would invest 1,406 in Park Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 150.00 from holding Park Hotels Resorts or generate 10.67% 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. Torm PLC Class
Performance |
| Timeline |
| Park Hotels Resorts |
| Torm PLC Class |
Park Hotels and Torm PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Torm PLC
The main advantage of trading using opposite Park Hotels and Torm PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Torm PLC 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 Torm PLC will offset losses from the drop in Torm PLC'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 |
| Torm PLC vs. International Seaways | Torm PLC vs. Ardmore Shpng | Torm PLC vs. Aquagold International | Torm PLC vs. Thrivent High Yield |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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