Correlation Between Park Hotels and United Utilities
Can any of the company-specific risk be diversified away by investing in both Park Hotels and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on Park Hotels and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and United Utilities.
Diversification Opportunities for Park Hotels and United Utilities
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Park and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Park Hotels i.e., Park Hotels and United Utilities go up and down completely randomly.
Pair Corralation between Park Hotels and United Utilities
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.15 times more return on investment than United Utilities. However, Park Hotels is 1.15 times more volatile than United Utilities Group. It trades about 0.09 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.09 per unit of risk. If you would invest 1,414 in Park Hotels Resorts on September 17, 2024 and sell it today you would earn a total of 135.50 from holding Park Hotels Resorts or generate 9.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Park Hotels Resorts vs. United Utilities Group
Performance |
Timeline |
Park Hotels Resorts |
United Utilities |
Park Hotels and United Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Hotels and United Utilities
The main advantage of trading using opposite Park Hotels and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Service Properties Trust | Park Hotels vs. RLJ Lodging Trust |
United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
Check out your portfolio center.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.
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