Correlation Between Park Hotels and American Assets

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

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

Diversification Opportunities for Park Hotels and American Assets

0.53

Correlation Coefficient

Park Hotels  American Assets

Very weak diversification

The 3 months correlation between Park and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and American Assets Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Assets Trust and Park 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 Park Hotels Resorts are associated (or correlated) with American Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Assets Trust has no effect on the direction of Park Hotels i.e., Park Hotels and American Assets go up and down completely randomly.

Pair Corralation between Park Hotels and American Assets

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to under-perform the American Assets. In addition to that, Park Hotels is 1.43 times more volatile than American Assets Trust. It trades about -0.01 of its total potential returns per unit of risk. American Assets Trust is currently generating about 0.0 per unit of volatility. If you would invest  2,631  in American Assets Trust on October 3, 2024 and sell it today you would lose (5.00) from holding American Assets Trust or give up 0.19% of portfolio value over 90 days.

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

Park Hotels Resorts  vs.  American Assets Trust

Park Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Park Hotels is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

American Assets Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Assets Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Assets is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Park Hotels and American Assets

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

The idea behind Park Hotels Resorts and American Assets Trust 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.