Correlation Between Bt Brands and Park Hotels

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

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

Diversification Opportunities for Bt Brands and Park Hotels

-0.5

Correlation Coefficient

Bt Brands  Park Hotels

Very good diversification

The 3 months correlation between BTBD and Park is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands 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 Bt Brands 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 Bt Brands 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 Bt Brands i.e., Bt Brands and Park Hotels go up and down completely randomly.

Pair Corralation between Bt Brands and Park Hotels

Given the investment horizon of 90 days Bt Brands is expected to under-perform the Park Hotels. In addition to that, Bt Brands is 4.71 times more volatile than Park Hotels Resorts. It trades about -0.1 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.42 per unit of volatility. If you would invest  1,310  in Park Hotels Resorts on December 4, 2024 and sell it today you would lose (145.50) from holding Park Hotels Resorts or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Bt Brands  vs.  Park Hotels Resorts

Bt Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bt Brands and Park Hotels

The main advantage of trading using opposite Bt Brands and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands 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 Bt Brands 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.