Correlation Between Golden Entertainment and Hilton Grand

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

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

Diversification Opportunities for Golden Entertainment and Hilton Grand

0.83

Correlation Coefficient

Golden Entertainment  Hilton Grand

Very poor diversification

The 3 months correlation between Golden and Hilton is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment i.e., Golden Entertainment and Hilton Grand go up and down completely randomly.

Pair Corralation between Golden Entertainment and Hilton Grand

Given the investment horizon of 90 days Golden Entertainment is expected to under-perform the Hilton Grand. But the stock apears to be less risky and, when comparing its historical volatility, Golden Entertainment is 1.09 times less risky than Hilton Grand. The stock trades about -0.08 of its potential returns per unit of risk. The Hilton Grand Vacations is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,239  in Hilton Grand Vacations on November 29, 2024 and sell it today you would earn a total of  11.00  from holding Hilton Grand Vacations or generate 0.26% return on investment over 90 days.

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

Golden Entertainment  vs.  Hilton Grand Vacations

Golden Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Golden Entertainment and Hilton Grand

The main advantage of trading using opposite Golden Entertainment and Hilton Grand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Entertainment 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 Golden Entertainment 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.