Correlation Between HYATT HOTELS and Centene Corp

Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and Centene Corp 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 Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HYATT HOTELS A and Centene Corp, you can compare the effects of market volatilities on HYATT HOTELS and Centene Corp 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 Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and Centene Corp.

Diversification Opportunities for HYATT HOTELS and Centene Corp

-0.67

Correlation Coefficient

HYATT HOTELS  Centene Corp

Excellent diversification

The 3 months correlation between HYATT and Centene is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp 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 A are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and Centene Corp go up and down completely randomly.

Pair Corralation between HYATT HOTELS and Centene Corp

Assuming the 90 days trading horizon HYATT HOTELS A is expected to generate 0.69 times more return on investment than Centene Corp. However, HYATT HOTELS A is 1.45 times less risky than Centene Corp. It trades about 0.13 of its potential returns per unit of risk. Centene Corp is currently generating about -0.09 per unit of risk. If you would invest  12,967  in HYATT HOTELS A on September 16, 2024 and sell it today you would earn a total of  2,133  from holding HYATT HOTELS A or generate 16.45% return on investment over 90 days.

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

HYATT HOTELS A  vs.  Centene Corp

HYATT HOTELS A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centene Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centene Corp 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HYATT HOTELS and Centene Corp

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

The idea behind HYATT HOTELS A and Centene Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.