Correlation Between Host Hotels and First Quantum
Can any of the company-specific risk be diversified away by investing in both Host Hotels and First Quantum 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 First Quantum 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 First Quantum Minerals, you can compare the effects of market volatilities on Host Hotels and First Quantum 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 First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and First Quantum.
Diversification Opportunities for Host Hotels and First Quantum
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Host Hotels i.e., Host Hotels and First Quantum go up and down completely randomly.
Pair Corralation between Host Hotels and First Quantum
Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.53 times more return on investment than First Quantum. However, Host Hotels Resorts is 1.88 times less risky than First Quantum. It trades about 0.32 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.05 per unit of risk. If you would invest 1,600 in Host Hotels Resorts on September 20, 2024 and sell it today you would earn a total of 140.00 from holding Host Hotels Resorts or generate 8.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Host Hotels Resorts vs. First Quantum Minerals
Performance |
Timeline |
Host Hotels Resorts |
First Quantum Minerals |
Host Hotels and First Quantum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Host Hotels and First Quantum
The main advantage of trading using opposite Host Hotels and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.Host Hotels vs. Silicon Motion Technology | Host Hotels vs. CARSALESCOM | Host Hotels vs. GRUPO CARSO A1 | Host Hotels vs. NISSAN CHEMICAL IND |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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