Correlation Between LIFE + and Host Hotels

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

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

Diversification Opportunities for LIFE + and Host Hotels

0.64

Correlation Coefficient

LIFE +  Host Hotels

Poor diversification

The 3 months correlation between LIFE and Host is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of LIFE + i.e., LIFE + and Host Hotels go up and down completely randomly.

Pair Corralation between LIFE + and Host Hotels

Assuming the 90 days horizon LIFE BANC SPLIT is expected to generate 1.88 times more return on investment than Host Hotels. However, LIFE + is 1.88 times more volatile than Host Hotels Resorts. It trades about -0.02 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.22 per unit of risk. If you would invest  579.00  in LIFE BANC SPLIT on December 28, 2024 and sell it today you would lose (34.00) from holding LIFE BANC SPLIT or give up 5.87% of portfolio value over 90 days.

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

LIFE BANC SPLIT  vs.  Host Hotels Resorts

LIFE BANC SPLIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFE BANC SPLIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIFE + is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Host Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Host Hotels Resorts 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.

Pair Trading with LIFE + and Host Hotels

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

The idea behind LIFE BANC SPLIT and Host Hotels Resorts 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.