Correlation Between Park Hotels and Hannon Armstrong

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

Diversification Opportunities for Park Hotels and Hannon Armstrong

-0.84

Correlation Coefficient

Park Hotels  Hannon Armstrong

Pay attention - limited upside

The 3 months correlation between Park and Hannon is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus 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 Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of Park Hotels i.e., Park Hotels and Hannon Armstrong go up and down completely randomly.

Pair Corralation between Park Hotels and Hannon Armstrong

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to under-perform the Hannon Armstrong. In addition to that, Park Hotels is 1.06 times more volatile than Hannon Armstrong Sustainable. It trades about -0.19 of its total potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about 0.09 per unit of volatility. If you would invest  2,697  in Hannon Armstrong Sustainable on December 27, 2024 and sell it today you would earn a total of  235.00  from holding Hannon Armstrong Sustainable or generate 8.71% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Hannon Armstrong Sustainable

Park Hotels Resorts

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Hannon Armstrong Sus

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hannon Armstrong Sustainable are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hannon Armstrong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Park Hotels and Hannon Armstrong

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

The idea behind Park Hotels Resorts and Hannon Armstrong Sustainable 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.