Correlation Between Hilton Worldwide and ON SEMICONDUCTOR

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

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

Diversification Opportunities for Hilton Worldwide and ON SEMICONDUCTOR

0.24

Correlation Coefficient

Hilton Worldwide  ON SEMICONDUCTOR

Modest diversification

The 3 months correlation between Hilton and XS4 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR and Hilton Worldwide 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 Worldwide Holdings are associated (or correlated) with ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and ON SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Hilton Worldwide and ON SEMICONDUCTOR

Assuming the 90 days trading horizon Hilton Worldwide Holdings is expected to generate 0.58 times more return on investment than ON SEMICONDUCTOR. However, Hilton Worldwide Holdings is 1.72 times less risky than ON SEMICONDUCTOR. It trades about 0.27 of its potential returns per unit of risk. ON SEMICONDUCTOR is currently generating about 0.04 per unit of risk. If you would invest  19,293  in Hilton Worldwide Holdings on September 4, 2024 and sell it today you would earn a total of  4,617  from holding Hilton Worldwide Holdings or generate 23.93% return on investment over 90 days.

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

Hilton Worldwide Holdings  vs.  ON SEMICONDUCTOR

Hilton Worldwide Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hilton Worldwide reported solid returns over the last few months and may actually be approaching a breakup point.

ON SEMICONDUCTOR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hilton Worldwide and ON SEMICONDUCTOR

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

The idea behind Hilton Worldwide Holdings and ON SEMICONDUCTOR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.