Correlation Between Hilton Worldwide and Enova International

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

Diversification Opportunities for Hilton Worldwide and Enova International

0.68

Correlation Coefficient

Hilton Worldwide  Enova International

Poor diversification

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

Pair Corralation between Hilton Worldwide and Enova International

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to under-perform the Enova International. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Worldwide Holdings is 1.4 times less risky than Enova International. The stock trades about -0.08 of its potential returns per unit of risk. The Enova International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,961  in Enova International on December 25, 2024 and sell it today you would earn a total of  233.00  from holding Enova International or generate 2.34% 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.  Enova International

Hilton Worldwide Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Worldwide Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Enova International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Enova International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hilton Worldwide and Enova International

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

The idea behind Hilton Worldwide Holdings and Enova International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.