Correlation Between HYATT HOTELS and TC Energy

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

Diversification Opportunities for HYATT HOTELS and TC Energy

0.66

Correlation Coefficient

HYATT HOTELS  TC Energy

Poor diversification

The 3 months correlation between HYATT and TRS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and TC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy 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 TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and TC Energy go up and down completely randomly.

Pair Corralation between HYATT HOTELS and TC Energy

Assuming the 90 days trading horizon HYATT HOTELS A is expected to under-perform the TC Energy. In addition to that, HYATT HOTELS is 1.24 times more volatile than TC Energy. It trades about -0.08 of its total potential returns per unit of risk. TC Energy is currently generating about -0.06 per unit of volatility. If you would invest  4,538  in TC Energy on October 6, 2024 and sell it today you would lose (67.00) from holding TC Energy or give up 1.48% of portfolio value over 90 days.

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

HYATT HOTELS A  vs.  TC Energy

HYATT HOTELS A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TC Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TC Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HYATT HOTELS and TC Energy

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

The idea behind HYATT HOTELS A and TC Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.