Correlation Between REGAL HOTEL and Host Hotels
Can any of the company-specific risk be diversified away by investing in both REGAL HOTEL and Host Hotels 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 REGAL HOTEL and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL HOTEL INTL and Host Hotels Resorts, you can compare the effects of market volatilities on REGAL HOTEL and Host Hotels 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 REGAL HOTEL with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL HOTEL and Host Hotels.
Diversification Opportunities for REGAL HOTEL and Host Hotels
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between REGAL and Host is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and REGAL HOTEL 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 REGAL HOTEL INTL are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of REGAL HOTEL i.e., REGAL HOTEL and Host Hotels go up and down completely randomly.
Pair Corralation between REGAL HOTEL and Host Hotels
Assuming the 90 days trading horizon REGAL HOTEL is expected to generate 2.2 times less return on investment than Host Hotels. But when comparing it to its historical volatility, REGAL HOTEL INTL is 1.37 times less risky than Host Hotels. It trades about 0.1 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Host Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 130.00 from holding Host Hotels Resorts or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL HOTEL INTL vs. Host Hotels Resorts
Performance |
| Timeline |
| REGAL HOTEL INTL |
| Host Hotels Resorts |
REGAL HOTEL and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL HOTEL and Host Hotels
The main advantage of trading using opposite REGAL HOTEL and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL HOTEL position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Superior Plus Corp | REGAL HOTEL vs. SIVERS SEMICONDUCTORS AB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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