Correlation Between Falcons Beyond and Park Hotels

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

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

Diversification Opportunities for Falcons Beyond and Park Hotels

-0.5

Correlation Coefficient

Falcons Beyond  Park Hotels

Very good diversification

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

Pair Corralation between Falcons Beyond and Park Hotels

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 8.53 times more return on investment than Park Hotels. However, Falcons Beyond is 8.53 times more volatile than Park Hotels Resorts. It trades about 0.05 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.12 per unit of risk. If you would invest  123.00  in Falcons Beyond Global, on September 13, 2024 and sell it today you would lose (24.00) from holding Falcons Beyond Global, or give up 19.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Falcons Beyond Global,  vs.  Park Hotels Resorts

Falcons Beyond Global,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Park Hotels Resorts

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Park Hotels disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcons Beyond and Park Hotels

The main advantage of trading using opposite Falcons Beyond and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond 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 Falcons Beyond Global, 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.