Correlation Between WT OFFSHORE and Host Hotels
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE 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 WT OFFSHORE and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and Host Hotels Resorts, you can compare the effects of market volatilities on WT OFFSHORE 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 WT OFFSHORE with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and Host Hotels.
Diversification Opportunities for WT OFFSHORE and Host Hotels
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UWV and Host is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE i.e., WT OFFSHORE and Host Hotels go up and down completely randomly.
Pair Corralation between WT OFFSHORE and Host Hotels
Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the Host Hotels. In addition to that, WT OFFSHORE is 1.98 times more volatile than Host Hotels Resorts. It trades about -0.06 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.04 per unit of volatility. If you would invest 1,343 in Host Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 277.00 from holding Host Hotels Resorts or generate 20.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
WT OFFSHORE vs. Host Hotels Resorts
Performance |
Timeline |
WT OFFSHORE |
Host Hotels Resorts |
WT OFFSHORE and Host Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WT OFFSHORE and Host Hotels
The main advantage of trading using opposite WT OFFSHORE and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE 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.WT OFFSHORE vs. Micron Technology | WT OFFSHORE vs. AEON STORES | WT OFFSHORE vs. Charter Communications | WT OFFSHORE vs. Align Technology |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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