Correlation Between Arch Capital and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Park 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 Arch Capital and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and Park Hotels Resorts, you can compare the effects of market volatilities on Arch Capital and Park 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 Arch Capital with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Park Hotels.
Diversification Opportunities for Arch Capital and Park Hotels
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arch and Park is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Arch Capital 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 Arch Capital Group are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Arch Capital i.e., Arch Capital and Park Hotels go up and down completely randomly.
Pair Corralation between Arch Capital and Park Hotels
Assuming the 90 days horizon Arch Capital Group is expected to generate 0.91 times more return on investment than Park Hotels. However, Arch Capital Group is 1.1 times less risky than Park Hotels. It trades about 0.08 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.0 per unit of risk. If you would invest 7,572 in Arch Capital Group on September 1, 2024 and sell it today you would earn a total of 1,920 from holding Arch Capital Group or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Park Hotels Resorts
Performance |
| Timeline |
| Arch Capital Group |
| Park Hotels Resorts |
Arch Capital and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Park Hotels
The main advantage of trading using opposite Arch Capital and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Arch Capital vs. GRIFFIN MINING LTD | Arch Capital vs. Ross Stores | Arch Capital vs. Fast Retailing Co | Arch Capital vs. Caseys General Stores |
| Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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