Correlation Between Canterbury Park and Hyatt Hotels

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

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

Diversification Opportunities for Canterbury Park and Hyatt Hotels

0.41

Correlation Coefficient

Canterbury Park  Hyatt Hotels

Very weak diversification

The 3 months correlation between Canterbury and Hyatt is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Canterbury Park Holding and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Canterbury Park 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 Canterbury Park Holding are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Canterbury Park i.e., Canterbury Park and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Canterbury Park and Hyatt Hotels

Given the investment horizon of 90 days Canterbury Park Holding is expected to generate 1.24 times more return on investment than Hyatt Hotels. However, Canterbury Park is 1.24 times more volatile than Hyatt Hotels. It trades about 0.07 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.08 per unit of risk. If you would invest  1,876  in Canterbury Park Holding on September 12, 2024 and sell it today you would earn a total of  175.00  from holding Canterbury Park Holding or generate 9.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Canterbury Park Holding  vs.  Hyatt Hotels

Canterbury Park Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canterbury Park Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Canterbury Park may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hyatt Hotels

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canterbury Park and Hyatt Hotels

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

The idea behind Canterbury Park Holding and Hyatt Hotels 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.