Correlation Between WILLIS LEASE and Park Hotels
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE 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 WILLIS LEASE and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WILLIS LEASE FIN and Park Hotels Resorts, you can compare the effects of market volatilities on WILLIS LEASE 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 WILLIS LEASE with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Park Hotels.
Diversification Opportunities for WILLIS LEASE and Park Hotels
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WILLIS and Park is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN 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 WILLIS LEASE 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 WILLIS LEASE FIN 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 WILLIS LEASE i.e., WILLIS LEASE and Park Hotels go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Park Hotels
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 2.13 times more return on investment than Park Hotels. However, WILLIS LEASE is 2.13 times more volatile than Park Hotels Resorts. It trades about 0.29 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.08 per unit of risk. If you would invest 9,489 in WILLIS LEASE FIN on August 30, 2024 and sell it today you would earn a total of 11,311 from holding WILLIS LEASE FIN or generate 119.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Park Hotels Resorts
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Park Hotels Resorts |
WILLIS LEASE and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Park Hotels
The main advantage of trading using opposite WILLIS LEASE and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE 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.| WILLIS LEASE vs. National Storage Affiliates | WILLIS LEASE vs. DATANG INTL POW | WILLIS LEASE vs. BE Semiconductor Industries | WILLIS LEASE vs. Hyrican Informationssysteme Aktiengesellschaft |
| Park Hotels vs. Ares Management Corp | Park Hotels vs. CeoTronics AG | Park Hotels vs. Brockhaus Capital Management | Park Hotels vs. Food Life Companies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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