Correlation Between Apple and Park Hotels

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

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

Diversification Opportunities for Apple and Park Hotels

0.28

Correlation Coefficient

Apple  Park Hotels

Modest diversification

The 3 months correlation between Apple and Park is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Apple 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 Apple Inc are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Apple i.e., Apple and Park Hotels go up and down completely randomly.

Pair Corralation between Apple and Park Hotels

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.85 times more return on investment than Park Hotels. However, Apple Inc is 1.18 times less risky than Park Hotels. It trades about 0.0 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.15 per unit of risk. If you would invest  22,860  in Apple Inc on December 2, 2024 and sell it today you would lose (115.00) from holding Apple Inc or give up 0.5% of portfolio value over 90 days.

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

Apple Inc  vs.  Park Hotels Resorts

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Park Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and Park Hotels

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

The idea behind Apple Inc and Park 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.