Correlation Between Hilton Grand and Golden Entertainment

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

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

Diversification Opportunities for Hilton Grand and Golden Entertainment

0.8

Correlation Coefficient

Hilton Grand  Golden Entertainment

Very poor diversification

The 3 months correlation between Hilton and Golden is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Grand Vacations and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and Hilton Grand 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 Hilton Grand Vacations are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Hilton Grand i.e., Hilton Grand and Golden Entertainment go up and down completely randomly.

Pair Corralation between Hilton Grand and Golden Entertainment

Considering the 90-day investment horizon Hilton Grand Vacations is expected to generate 1.25 times more return on investment than Golden Entertainment. However, Hilton Grand is 1.25 times more volatile than Golden Entertainment. It trades about -0.01 of its potential returns per unit of risk. Golden Entertainment is currently generating about -0.09 per unit of risk. If you would invest  3,907  in Hilton Grand Vacations on December 28, 2024 and sell it today you would lose (120.00) from holding Hilton Grand Vacations or give up 3.07% of portfolio value over 90 days.

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

Hilton Grand Vacations  vs.  Golden Entertainment

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.

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.

Pair Trading with Hilton Grand and Golden Entertainment

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

The idea behind Hilton Grand Vacations and Golden Entertainment 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.