Correlation Between Hyatt Hotels and Whitbread PLC

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

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

Diversification Opportunities for Hyatt Hotels and Whitbread PLC

-0.51

Correlation Coefficient

Hyatt Hotels  Whitbread PLC

Excellent diversification

The 3 months correlation between Hyatt and Whitbread is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Whitbread PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread PLC ADR and Hyatt Hotels 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 Hyatt Hotels are associated (or correlated) with Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC ADR has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Whitbread PLC go up and down completely randomly.

Pair Corralation between Hyatt Hotels and Whitbread PLC

Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.19 times more return on investment than Whitbread PLC. However, Hyatt Hotels is 1.19 times more volatile than Whitbread PLC ADR. It trades about 0.01 of its potential returns per unit of risk. Whitbread PLC ADR is currently generating about 0.0 per unit of risk. If you would invest  15,461  in Hyatt Hotels on October 10, 2024 and sell it today you would lose (152.00) from holding Hyatt Hotels or give up 0.98% of portfolio value over 90 days.

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

Hyatt Hotels  vs.  Whitbread PLC ADR

Hyatt Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyatt Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Hyatt Hotels is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Whitbread PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whitbread PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hyatt Hotels and Whitbread PLC

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

The idea behind Hyatt Hotels and Whitbread PLC ADR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.