Correlation Between LuxUrban Hotels and Hyatt Hotels

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

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

Diversification Opportunities for LuxUrban Hotels and Hyatt Hotels

-0.58

Correlation Coefficient

LuxUrban Hotels  Hyatt Hotels

Excellent diversification

The 3 months correlation between LuxUrban and Hyatt is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and LuxUrban 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 LuxUrban Hotels are associated (or correlated) with Hyatt Hotels. 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 has no effect on the direction of LuxUrban Hotels i.e., LuxUrban Hotels and Hyatt Hotels go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Hyatt Hotels

Given the investment horizon of 90 days LuxUrban Hotels is expected to under-perform the Hyatt Hotels. In addition to that, LuxUrban Hotels is 6.17 times more volatile than Hyatt Hotels. It trades about -0.14 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.0 per unit of volatility. If you would invest  15,408  in Hyatt Hotels on October 10, 2024 and sell it today you would lose (174.00) from holding Hyatt Hotels or give up 1.13% of portfolio value over 90 days.

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

LuxUrban Hotels  vs.  Hyatt Hotels

LuxUrban Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 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 fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hyatt Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyatt Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Hyatt Hotels is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with LuxUrban Hotels and Hyatt Hotels

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

The idea behind LuxUrban Hotels and Hyatt Hotels 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..