Correlation Between Host Hotels and HYATT HOTELS-A

Can any of the company-specific risk be diversified away by investing in both Host Hotels and HYATT HOTELS-A 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 Host Hotels and HYATT HOTELS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Host Hotels Resorts and HYATT HOTELS A, you can compare the effects of market volatilities on Host Hotels and HYATT HOTELS-A 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 Host Hotels with a short position of HYATT HOTELS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and HYATT HOTELS-A.

Diversification Opportunities for Host Hotels and HYATT HOTELS-A

0.91

Correlation Coefficient

Host Hotels  HYATT HOTELS-A

Almost no diversification

The 3 months correlation between Host and HYATT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and Host 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 Host Hotels Resorts are associated (or correlated) with HYATT HOTELS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Host Hotels i.e., Host Hotels and HYATT HOTELS-A go up and down completely randomly.

Pair Corralation between Host Hotels and HYATT HOTELS-A

Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.75 times more return on investment than HYATT HOTELS-A. However, Host Hotels Resorts is 1.33 times less risky than HYATT HOTELS-A. It trades about -0.23 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about -0.18 per unit of risk. If you would invest  1,690  in Host Hotels Resorts on December 29, 2024 and sell it today you would lose (360.00) from holding Host Hotels Resorts or give up 21.3% of portfolio value over 90 days.

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

Host Hotels Resorts  vs.  HYATT HOTELS A

Host Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Host Hotels Resorts 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.

HYATT HOTELS A

Risk-Adjusted Performance

Very Weak

Over the last 90 days HYATT HOTELS A 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.

Pair Trading with Host Hotels and HYATT HOTELS-A

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

The idea behind Host Hotels Resorts and HYATT HOTELS A 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..