Correlation Between Host Hotels and Infrastrutture Wireless

Can any of the company-specific risk be diversified away by investing in both Host Hotels and Infrastrutture Wireless 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 Host Hotels and Infrastrutture Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Host Hotels Resorts and Infrastrutture Wireless Italiane, you can compare the effects of market volatilities on Host Hotels and Infrastrutture Wireless 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 Host Hotels with a short position of Infrastrutture Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Infrastrutture Wireless.

Diversification Opportunities for Host Hotels and Infrastrutture Wireless

-0.35

Correlation Coefficient

Host Hotels  Infrastrutture Wireless

Very good diversification

The 3 months correlation between Host and Infrastrutture is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of Host Hotels i.e., Host Hotels and Infrastrutture Wireless go up and down completely randomly.

Pair Corralation between Host Hotels and Infrastrutture Wireless

Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 1.84 times more return on investment than Infrastrutture Wireless. However, Host Hotels is 1.84 times more volatile than Infrastrutture Wireless Italiane. It trades about 0.02 of its potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about 0.02 per unit of risk. If you would invest  1,597  in Host Hotels Resorts on October 11, 2024 and sell it today you would earn a total of  101.00  from holding Host Hotels Resorts or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

Host Hotels Resorts  vs.  Infrastrutture Wireless Italia

Host Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Host Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Host Hotels is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Host Hotels and Infrastrutture Wireless

The main advantage of trading using opposite Host Hotels and Infrastrutture Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Infrastrutture Wireless 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 Infrastrutture Wireless will offset losses from the drop in Infrastrutture Wireless' long position.

The idea behind Host Hotels Resorts and Infrastrutture Wireless Italiane pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.