Correlation Between Park Hotels and Heartland Express

Can any of the company-specific risk be diversified away by investing in both Park Hotels and Heartland Express 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 Heartland Express 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 Heartland Express, you can compare the effects of market volatilities on Park Hotels and Heartland Express 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 Heartland Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Heartland Express.

Diversification Opportunities for Park Hotels and Heartland Express

0.88

Correlation Coefficient

Park Hotels  Heartland Express

Very poor diversification

The 3 months correlation between Park and Heartland is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Heartland Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Express 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 Heartland Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Express has no effect on the direction of Park Hotels i.e., Park Hotels and Heartland Express go up and down completely randomly.

Pair Corralation between Park Hotels and Heartland Express

Assuming the 90 days trading horizon Park Hotels Resorts is expected to under-perform the Heartland Express. But the stock apears to be less risky and, when comparing its historical volatility, Park Hotels Resorts is 1.15 times less risky than Heartland Express. The stock trades about -0.23 of its potential returns per unit of risk. The Heartland Express is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Heartland Express on December 22, 2024 and sell it today you would lose (218.00) from holding Heartland Express or give up 20.22% 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.  Heartland Express

Park Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Heartland Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartland Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Park Hotels and Heartland Express

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

The idea behind Park Hotels Resorts and Heartland Express 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.