Correlation Between Host Hotels and Eco Animal

Can any of the company-specific risk be diversified away by investing in both Host Hotels and Eco Animal 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 Eco Animal 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 Eco Animal Health, you can compare the effects of market volatilities on Host Hotels and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Eco Animal.

Diversification Opportunities for Host Hotels and Eco Animal

-0.02

Correlation Coefficient

Host Hotels  Eco Animal

Good diversification

The 3 months correlation between Host and Eco is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Host Hotels i.e., Host Hotels and Eco Animal go up and down completely randomly.

Pair Corralation between Host Hotels and Eco Animal

Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Eco Animal. In addition to that, Host Hotels is 1.94 times more volatile than Eco Animal Health. It trades about -0.23 of its total potential returns per unit of risk. Eco Animal Health is currently generating about 0.05 per unit of volatility. If you would invest  7,050  in Eco Animal Health on October 8, 2024 and sell it today you would earn a total of  50.00  from holding Eco Animal Health or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Host Hotels Resorts  vs.  Eco Animal Health

Host Hotels Resorts

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Host Hotels Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Eco Animal Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Animal Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eco Animal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Host Hotels and Eco Animal

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

The idea behind Host Hotels Resorts and Eco Animal Health 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..