Correlation Between Park Hotels and Stifel Financial

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

Diversification Opportunities for Park Hotels and Stifel Financial

-0.11

Correlation Coefficient

Park Hotels  Stifel Financial

Good diversification

The 3 months correlation between Park and Stifel is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Park Hotels i.e., Park Hotels and Stifel Financial go up and down completely randomly.

Pair Corralation between Park Hotels and Stifel Financial

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.69 times more return on investment than Stifel Financial. However, Park Hotels is 1.69 times more volatile than Stifel Financial Corp. It trades about 0.04 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.02 per unit of risk. If you would invest  1,003  in Park Hotels Resorts on October 7, 2024 and sell it today you would earn a total of  416.00  from holding Park Hotels Resorts or generate 41.48% 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.  Stifel Financial Corp

Park Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 4 (%) 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.

Stifel Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Park Hotels and Stifel Financial

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

The idea behind Park Hotels Resorts and Stifel Financial Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.