Correlation Between Park Hotels and Acadia Realty

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

Diversification Opportunities for Park Hotels and Acadia Realty

0.64

Correlation Coefficient

Park Hotels  Acadia Realty

Poor diversification

The 3 months correlation between Park and Acadia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Park Hotels i.e., Park Hotels and Acadia Realty go up and down completely randomly.

Pair Corralation between Park Hotels and Acadia Realty

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to under-perform the Acadia Realty. In addition to that, Park Hotels is 1.58 times more volatile than Acadia Realty Trust. It trades about -0.18 of its total potential returns per unit of risk. Acadia Realty Trust is currently generating about -0.15 per unit of volatility. If you would invest  2,514  in Acadia Realty Trust on October 4, 2024 and sell it today you would lose (98.00) from holding Acadia Realty Trust or give up 3.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Park Hotels Resorts  vs.  Acadia Realty Trust

Park Hotels Resorts

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Acadia Realty Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Acadia Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Park Hotels and Acadia Realty

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

The idea behind Park Hotels Resorts and Acadia Realty 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.