Correlation Between Hyatt Hotels and Fifth Third

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

By analyzing existing cross correlation between Hyatt Hotels and Fifth Third Bancorp, you can compare the effects of market volatilities on Hyatt Hotels and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Fifth Third.

Diversification Opportunities for Hyatt Hotels and Fifth Third

0.3

Correlation Coefficient

Hyatt Hotels  Fifth Third

Weak diversification

The 3 months correlation between Hyatt and Fifth is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Fifth Third go up and down completely randomly.

Pair Corralation between Hyatt Hotels and Fifth Third

Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 4.54 times less return on investment than Fifth Third. In addition to that, Hyatt Hotels is 1.2 times more volatile than Fifth Third Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  3,690  in Fifth Third Bancorp on December 4, 2024 and sell it today you would earn a total of  418.00  from holding Fifth Third Bancorp or generate 11.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hyatt Hotels  vs.  Fifth Third Bancorp

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fifth Third Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fifth Third 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 Fifth Third

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

The idea behind Hyatt Hotels and Fifth Third Bancorp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.