Correlation Between Sable Offshore and Park Hotels

Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Park Hotels 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 Sable Offshore and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sable Offshore Corp and Park Hotels Resorts, you can compare the effects of market volatilities on Sable Offshore and Park Hotels 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 Sable Offshore with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Park Hotels.

Diversification Opportunities for Sable Offshore and Park Hotels

0.07

Correlation Coefficient

Sable Offshore  Park Hotels

Significant diversification

The 3 months correlation between Sable and Park is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Sable Offshore i.e., Sable Offshore and Park Hotels go up and down completely randomly.

Pair Corralation between Sable Offshore and Park Hotels

Considering the 90-day investment horizon Sable Offshore Corp is expected to under-perform the Park Hotels. In addition to that, Sable Offshore is 2.87 times more volatile than Park Hotels Resorts. It trades about -0.04 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.04 per unit of volatility. If you would invest  1,536  in Park Hotels Resorts on September 27, 2024 and sell it today you would lose (30.00) from holding Park Hotels Resorts or give up 1.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Sable Offshore Corp  vs.  Park Hotels Resorts

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Park Hotels Resorts

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 3 (%) 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.

Pair Trading with Sable Offshore and Park Hotels

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

The idea behind Sable Offshore Corp and Park Hotels Resorts 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..