Correlation Between Park Hotels and Crdit Agricole

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

Diversification Opportunities for Park Hotels and Crdit Agricole

-0.82

Correlation Coefficient

Park Hotels  Crdit Agricole

Pay attention - limited upside

The 3 months correlation between Park and Crdit is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crdit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Park Hotels i.e., Park Hotels and Crdit Agricole go up and down completely randomly.

Pair Corralation between Park Hotels and Crdit Agricole

Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 1.38 times more return on investment than Crdit Agricole. However, Park Hotels is 1.38 times more volatile than Crdit Agricole SA. It trades about 0.06 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.02 per unit of risk. If you would invest  1,208  in Park Hotels Resorts on October 25, 2024 and sell it today you would earn a total of  82.00  from holding Park Hotels Resorts or generate 6.79% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Crdit Agricole SA

Park Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Crdit Agricole SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Crdit Agricole is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Park Hotels and Crdit Agricole

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

The idea behind Park Hotels Resorts and Crdit Agricole SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.