Correlation Between Park Hotels and Alexandria Real

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

Diversification Opportunities for Park Hotels and Alexandria Real

-0.47

Correlation Coefficient

Park Hotels  Alexandria Real

Very good diversification

The 3 months correlation between Park and Alexandria is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Alexandria Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Real Estate 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 Alexandria Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Real Estate has no effect on the direction of Park Hotels i.e., Park Hotels and Alexandria Real go up and down completely randomly.

Pair Corralation between Park Hotels and Alexandria Real

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.22 times more return on investment than Alexandria Real. However, Park Hotels is 1.22 times more volatile than Alexandria Real Estate. It trades about 0.11 of its potential returns per unit of risk. Alexandria Real Estate is currently generating about -0.18 per unit of risk. If you would invest  1,396  in Park Hotels Resorts on September 26, 2024 and sell it today you would earn a total of  111.00  from holding Park Hotels Resorts or generate 7.95% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Alexandria Real Estate

Park Hotels Resorts

Risk-Adjusted Performance

2 of 100

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.

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Park Hotels and Alexandria Real

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

The idea behind Park Hotels Resorts and Alexandria Real Estate 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.