Correlation Between Park Hotels and Fulcrum Metals

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

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

Diversification Opportunities for Park Hotels and Fulcrum Metals

-0.62

Correlation Coefficient

Park Hotels  Fulcrum Metals

Excellent diversification

The 3 months correlation between Park and Fulcrum is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Fulcrum Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Metals PLC and Park 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 Park Hotels Resorts are associated (or correlated) with Fulcrum Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Metals PLC has no effect on the direction of Park Hotels i.e., Park Hotels and Fulcrum Metals go up and down completely randomly.

Pair Corralation between Park Hotels and Fulcrum Metals

Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.55 times more return on investment than Fulcrum Metals. However, Park Hotels Resorts is 1.83 times less risky than Fulcrum Metals. It trades about 0.02 of its potential returns per unit of risk. Fulcrum Metals PLC is currently generating about -0.13 per unit of risk. If you would invest  1,452  in Park Hotels Resorts on September 29, 2024 and sell it today you would earn a total of  47.00  from holding Park Hotels Resorts or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.45%
Values	Daily Returns

Park Hotels Resorts  vs.  Fulcrum Metals PLC

Park Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fulcrum Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulcrum Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Park Hotels and Fulcrum Metals

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

The idea behind Park Hotels Resorts and Fulcrum Metals PLC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.