Correlation Between Charter Communications and Hyatt Hotels

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

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

Diversification Opportunities for Charter Communications and Hyatt Hotels

0.45

Correlation Coefficient

Charter Communications  Hyatt Hotels

Very weak diversification

The 3 months correlation between Charter and Hyatt is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Charter Communications and Hyatt Hotels

Assuming the 90 days trading horizon Charter Communications is expected to generate 13.96 times less return on investment than Hyatt Hotels. In addition to that, Charter Communications is 1.25 times more volatile than Hyatt Hotels. It trades about 0.0 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.05 per unit of volatility. If you would invest  9,959  in Hyatt Hotels on October 25, 2024 and sell it today you would earn a total of  5,016  from holding Hyatt Hotels or generate 50.37% return on investment over 90 days.

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

Charter Communications  vs.  Hyatt Hotels

Charter Communications

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hyatt Hotels

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Charter Communications and Hyatt Hotels

The main advantage of trading using opposite Charter Communications and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.