Correlation Between Park Hotels and BRAEMAR HOTELS

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

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

Diversification Opportunities for Park Hotels and BRAEMAR HOTELS

0.81

Correlation Coefficient

Park Hotels  BRAEMAR HOTELS

Very poor diversification

The 3 months correlation between Park and BRAEMAR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and Park 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 Park Hotels Resorts are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Park Hotels i.e., Park Hotels and BRAEMAR HOTELS go up and down completely randomly.

Pair Corralation between Park Hotels and BRAEMAR HOTELS

Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.71 times more return on investment than BRAEMAR HOTELS. However, Park Hotels Resorts is 1.4 times less risky than BRAEMAR HOTELS. It trades about -0.11 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about -0.16 per unit of risk. If you would invest  1,398  in Park Hotels Resorts on October 8, 2024 and sell it today you would lose (58.00) from holding Park Hotels Resorts or give up 4.15% of portfolio value over 90 days.

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

Park Hotels Resorts  vs.  BRAEMAR HOTELS RES

Park Hotels Resorts

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Park Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

BRAEMAR HOTELS RES

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRAEMAR HOTELS RES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BRAEMAR HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and BRAEMAR HOTELS

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

The idea behind Park Hotels Resorts and BRAEMAR HOTELS RES 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 CEOs Directory module to screen CEOs from public companies around the world.