Correlation Between Park Hotels and National Healthcare

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

Diversification Opportunities for Park Hotels and National Healthcare

0.4

Correlation Coefficient

Park Hotels  National Healthcare

Very weak diversification

The 3 months correlation between Park and National is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and National Healthcare Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Healthcare 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Healthcare has no effect on the direction of Park Hotels i.e., Park Hotels and National Healthcare go up and down completely randomly.

Pair Corralation between Park Hotels and National Healthcare

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to under-perform the National Healthcare. In addition to that, Park Hotels is 1.44 times more volatile than National Healthcare Properties,. It trades about -0.14 of its total potential returns per unit of risk. National Healthcare Properties, is currently generating about 0.09 per unit of volatility. If you would invest  1,299  in National Healthcare Properties, on December 18, 2024 and sell it today you would earn a total of  83.00  from holding National Healthcare Properties, or generate 6.39% return on investment over 90 days.

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

Park Hotels Resorts  vs.  National Healthcare Properties

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.

National Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Healthcare Properties, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, National Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Park Hotels and National Healthcare

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

The idea behind Park Hotels Resorts and National Healthcare Properties, 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.