Correlation Between United Utilities and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and HYATT HOTELS A, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and HYATT HOTELS.
Diversification Opportunities for United Utilities and HYATT HOTELS
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and HYATT is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and United Utilities 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 United Utilities Group 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 A has no effect on the direction of United Utilities i.e., United Utilities and HYATT HOTELS go up and down completely randomly.
Pair Corralation between United Utilities and HYATT HOTELS
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the HYATT HOTELS. In addition to that, United Utilities is 2.32 times more volatile than HYATT HOTELS A. It trades about -0.14 of its total potential returns per unit of risk. HYATT HOTELS A is currently generating about -0.16 per unit of volatility. If you would invest 15,235 in HYATT HOTELS A on October 25, 2024 and sell it today you would lose (445.00) from holding HYATT HOTELS A or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. HYATT HOTELS A
Performance |
| Timeline |
| United Utilities |
| HYATT HOTELS A |
United Utilities and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and HYATT HOTELS
The main advantage of trading using opposite United Utilities and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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's long position.| United Utilities vs. American Water Works | United Utilities vs. Guangdong Investment Limited | United Utilities vs. Gelsenwasser AG | United Utilities vs. American States Water |
| HYATT HOTELS vs. Pembina Pipeline Corp | HYATT HOTELS vs. Japan Asia Investment | HYATT HOTELS vs. Columbia Sportswear | HYATT HOTELS vs. AGNC INVESTMENT |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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