Correlation Between Hyatt Hotels and Scottish Mortgage

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

By analyzing existing cross correlation between Hyatt Hotels and Scottish Mortgage Investment, you can compare the effects of market volatilities on Hyatt Hotels and Scottish Mortgage 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 Hyatt Hotels with a short position of Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Scottish Mortgage.

Diversification Opportunities for Hyatt Hotels and Scottish Mortgage

0.2

Correlation Coefficient

Hyatt Hotels  Scottish Mortgage

Modest diversification

The 3 months correlation between Hyatt and Scottish is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Hyatt 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 Hyatt Hotels are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Hyatt Hotels and Scottish Mortgage

Assuming the 90 days trading horizon Hyatt Hotels is expected to under-perform the Scottish Mortgage. In addition to that, Hyatt Hotels is 1.23 times more volatile than Scottish Mortgage Investment. It trades about -0.22 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.01 per unit of volatility. If you would invest  1,141  in Scottish Mortgage Investment on December 21, 2024 and sell it today you would earn a total of  6.00  from holding Scottish Mortgage Investment or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Hyatt Hotels  vs.  Scottish Mortgage Investment

Hyatt Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyatt Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Scottish Mortgage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Scottish Mortgage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hyatt Hotels and Scottish Mortgage

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

The idea behind Hyatt Hotels and Scottish Mortgage Investment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.