Correlation Between Hilton Worldwide and Lindsay

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

Diversification Opportunities for Hilton Worldwide and Lindsay

0.7

Correlation Coefficient

Hilton Worldwide  Lindsay

Poor diversification

The 3 months correlation between Hilton and Lindsay is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Lindsay go up and down completely randomly.

Pair Corralation between Hilton Worldwide and Lindsay

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to generate 0.57 times more return on investment than Lindsay. However, Hilton Worldwide Holdings is 1.74 times less risky than Lindsay. It trades about 0.09 of its potential returns per unit of risk. Lindsay is currently generating about 0.0 per unit of risk. If you would invest  14,196  in Hilton Worldwide Holdings on October 21, 2024 and sell it today you would earn a total of  10,465  from holding Hilton Worldwide Holdings or generate 73.72% 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.  Lindsay

Hilton Worldwide Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Hilton Worldwide is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Lindsay

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hilton Worldwide and Lindsay

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

The idea behind Hilton Worldwide Holdings and Lindsay 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.