Correlation Between Park Hotels and National Health

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

Diversification Opportunities for Park Hotels and National Health

-0.12

Correlation Coefficient

Park Hotels  National Health

Good diversification

The 3 months correlation between Park and National is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Park Hotels i.e., Park Hotels and National Health go up and down completely randomly.

Pair Corralation between Park Hotels and National Health

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.41 times more return on investment than National Health. However, Park Hotels is 1.41 times more volatile than National Health Investors. It trades about 0.04 of its potential returns per unit of risk. National Health Investors is currently generating about 0.05 per unit of risk. If you would invest  1,057  in Park Hotels Resorts on October 13, 2024 and sell it today you would earn a total of  319.00  from holding Park Hotels Resorts or generate 30.18% return on investment over 90 days.

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

Park Hotels Resorts  vs.  National Health Investors

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.

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Park Hotels and National Health

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

The idea behind Park Hotels Resorts and National Health Investors 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.