Correlation Between Expedia and Hilton Grand

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

By analyzing existing cross correlation between Expedia Group and Hilton Grand Vacations, you can compare the effects of market volatilities on Expedia and Hilton Grand 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 Expedia with a short position of Hilton Grand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Hilton Grand.

Diversification Opportunities for Expedia and Hilton Grand

0.14

Correlation Coefficient

Expedia  Hilton Grand

Average diversification

The 3 months correlation between Expedia and Hilton is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations and Expedia 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 Expedia Group are associated (or correlated) with Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of Expedia i.e., Expedia and Hilton Grand go up and down completely randomly.

Pair Corralation between Expedia and Hilton Grand

Given the investment horizon of 90 days Expedia Group is expected to generate 1.73 times more return on investment than Hilton Grand. However, Expedia is 1.73 times more volatile than Hilton Grand Vacations. It trades about 0.06 of its potential returns per unit of risk. Hilton Grand Vacations is currently generating about -0.04 per unit of risk. If you would invest  18,462  in Expedia Group on November 29, 2024 and sell it today you would earn a total of  1,514  from holding Expedia Group or generate 8.2% return on investment over 90 days.

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

Expedia Group  vs.  Hilton Grand Vacations

Expedia Group

Risk-Adjusted Performance

Insignificant

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

Hilton Grand Vacations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Grand Vacations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Expedia and Hilton Grand

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

The idea behind Expedia Group and Hilton Grand Vacations 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.