Correlation Between Park Hotels and CareTrust REIT

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

Diversification Opportunities for Park Hotels and CareTrust REIT

-0.59

Correlation Coefficient

Park Hotels  CareTrust REIT

Excellent diversification

The 3 months correlation between Park and CareTrust is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT 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 CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of Park Hotels i.e., Park Hotels and CareTrust REIT go up and down completely randomly.

Pair Corralation between Park Hotels and CareTrust REIT

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.77 times more return on investment than CareTrust REIT. However, Park Hotels is 1.77 times more volatile than CareTrust REIT. It trades about -0.09 of its potential returns per unit of risk. CareTrust REIT is currently generating about -0.43 per unit of risk. If you would invest  1,550  in Park Hotels Resorts on September 24, 2024 and sell it today you would lose (60.00) from holding Park Hotels Resorts or give up 3.87% of portfolio value over 90 days.

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

Park Hotels Resorts  vs.  CareTrust REIT

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.

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Park Hotels and CareTrust REIT

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

The idea behind Park Hotels Resorts and CareTrust REIT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.