Correlation Between SPANISH MTN and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both SPANISH MTN and Hyatt 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 SPANISH MTN and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPANISH MTN GLD and Hyatt Hotels, you can compare the effects of market volatilities on SPANISH MTN and Hyatt 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 SPANISH MTN with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPANISH MTN and Hyatt Hotels.
Diversification Opportunities for SPANISH MTN and Hyatt Hotels
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPANISH and Hyatt is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPANISH MTN GLD and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and SPANISH MTN 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 SPANISH MTN GLD are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of SPANISH MTN i.e., SPANISH MTN and Hyatt Hotels go up and down completely randomly.
Pair Corralation between SPANISH MTN and Hyatt Hotels
Assuming the 90 days trading horizon SPANISH MTN GLD is expected to generate 2.36 times more return on investment than Hyatt Hotels. However, SPANISH MTN is 2.36 times more volatile than Hyatt Hotels. It trades about 0.03 of its potential returns per unit of risk. Hyatt Hotels is currently generating about -0.19 per unit of risk. If you would invest 6.95 in SPANISH MTN GLD on November 29, 2024 and sell it today you would lose (0.05) from holding SPANISH MTN GLD or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPANISH MTN GLD vs. Hyatt Hotels
Performance |
| Timeline |
| SPANISH MTN GLD |
| Hyatt Hotels |
SPANISH MTN and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPANISH MTN and Hyatt Hotels
The main advantage of trading using opposite SPANISH MTN and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPANISH MTN position performs unexpectedly, Hyatt 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| SPANISH MTN vs. SYSTEMAIR AB | SPANISH MTN vs. Norwegian Air Shuttle | SPANISH MTN vs. H2O Retailing | SPANISH MTN vs. MARKET VECTR RETAIL |
| Hyatt Hotels vs. CHEMICAL INDUSTRIES | Hyatt Hotels vs. International Consolidated Airlines | Hyatt Hotels vs. Globex Mining Enterprises | Hyatt Hotels vs. Monument Mining Limited |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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