Correlation Between Shangri La and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both Shangri La and Hilton Worldwide 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 Shangri La and Hilton Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Asia Limited and Hilton Worldwide Holdings, you can compare the effects of market volatilities on Shangri La and Hilton Worldwide 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 Shangri La with a short position of Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Hilton Worldwide.
Diversification Opportunities for Shangri La and Hilton Worldwide
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shangri and Hilton is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Asia Limited and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings and Shangri La 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 Shangri La Asia Limited are associated (or correlated) with Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Shangri La i.e., Shangri La and Hilton Worldwide go up and down completely randomly.
Pair Corralation between Shangri La and Hilton Worldwide
Assuming the 90 days horizon Shangri La is expected to generate 2.34 times less return on investment than Hilton Worldwide. In addition to that, Shangri La is 1.56 times more volatile than Hilton Worldwide Holdings. It trades about 0.03 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about 0.13 per unit of volatility. If you would invest 21,434 in Hilton Worldwide Holdings on September 13, 2024 and sell it today you would earn a total of 4,364 from holding Hilton Worldwide Holdings or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Shangri La Asia Limited vs. Hilton Worldwide Holdings
Performance |
| Timeline |
| Shangri La Asia |
| Hilton Worldwide Holdings |
Shangri La and Hilton Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Hilton Worldwide
The main advantage of trading using opposite Shangri La and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide's long position.| Shangri La vs. Hilton Worldwide Holdings | Shangri La vs. Hyatt Hotels | Shangri La vs. Wyndham Hotels Resorts | Shangri La vs. Choice Hotels International |
| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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