Correlation Between Hilton Worldwide and Dell Technologies

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

Diversification Opportunities for Hilton Worldwide and Dell Technologies

0.68

Correlation Coefficient

Hilton Worldwide  Dell Technologies

Poor diversification

The 3 months correlation between Hilton and Dell is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Dell Technologies go up and down completely randomly.

Pair Corralation between Hilton Worldwide and Dell Technologies

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to generate 0.32 times more return on investment than Dell Technologies. However, Hilton Worldwide Holdings is 3.12 times less risky than Dell Technologies. It trades about 0.1 of its potential returns per unit of risk. Dell Technologies is currently generating about -0.16 per unit of risk. If you would invest  25,045  in Hilton Worldwide Holdings on September 13, 2024 and sell it today you would earn a total of  546.00  from holding Hilton Worldwide Holdings or generate 2.18% return on investment over 90 days.

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

Hilton Worldwide Holdings  vs.  Dell Technologies

Hilton Worldwide Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Hilton Worldwide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dell Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Dell Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hilton Worldwide and Dell Technologies

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

The idea behind Hilton Worldwide Holdings and Dell Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.