Correlation Between Park Hotels and Tandem Diabetes

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

Diversification Opportunities for Park Hotels and Tandem Diabetes

-0.25

Correlation Coefficient

Park Hotels  Tandem Diabetes

Very good diversification

The 3 months correlation between Park and Tandem is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care 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 Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Park Hotels i.e., Park Hotels and Tandem Diabetes go up and down completely randomly.

Pair Corralation between Park Hotels and Tandem Diabetes

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to under-perform the Tandem Diabetes. But the stock apears to be less risky and, when comparing its historical volatility, Park Hotels Resorts is 2.03 times less risky than Tandem Diabetes. The stock trades about 0.0 of its potential returns per unit of risk. The Tandem Diabetes Care is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,424  in Tandem Diabetes Care on October 7, 2024 and sell it today you would earn a total of  259.00  from holding Tandem Diabetes Care or generate 7.56% 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.  Tandem Diabetes Care

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.

Tandem Diabetes Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tandem Diabetes Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Park Hotels and Tandem Diabetes

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

The idea behind Park Hotels Resorts and Tandem Diabetes Care 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.