Correlation Between Service Properties and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Service Properties 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 Service Properties and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Properties Trust and Park Hotels Resorts, you can compare the effects of market volatilities on Service Properties 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 Service Properties with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Properties and Park Hotels.
Diversification Opportunities for Service Properties and Park Hotels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Service and Park is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust 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 Service Properties 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 Service Properties Trust 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 Service Properties i.e., Service Properties and Park Hotels go up and down completely randomly.
Pair Corralation between Service Properties and Park Hotels
Considering the 90-day investment horizon Service Properties Trust is expected to under-perform the Park Hotels. In addition to that, Service Properties is 1.36 times more volatile than Park Hotels Resorts. It trades about -0.07 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of volatility. If you would invest 967.00 in Park Hotels Resorts on December 1, 2024 and sell it today you would earn a total of 261.00 from holding Park Hotels Resorts or generate 26.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Service Properties Trust vs. Park Hotels Resorts
Performance |
Timeline |
Service Properties Trust |
Park Hotels Resorts |
Service Properties and Park Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Service Properties and Park Hotels
The main advantage of trading using opposite Service Properties and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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.Service Properties vs. Jerash Holdings | Service Properties vs. Columbia Sportswear | Service Properties vs. Gildan Activewear | Service Properties vs. Fluent Inc |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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