Correlation Between Solstad Offshore and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Hilton Worldwide 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 Solstad Offshore and Hilton Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Hilton Worldwide Holdings, you can compare the effects of market volatilities on Solstad Offshore and Hilton Worldwide 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 Solstad Offshore with a short position of Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Hilton Worldwide.
Diversification Opportunities for Solstad Offshore and Hilton Worldwide
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Hilton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings and Solstad 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 Solstad Offshore ASA are associated (or correlated) with Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Hilton Worldwide go up and down completely randomly.
Pair Corralation between Solstad Offshore and Hilton Worldwide
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 1.13 times less return on investment than Hilton Worldwide. In addition to that, Solstad Offshore is 2.6 times more volatile than Hilton Worldwide Holdings. It trades about 0.04 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about 0.13 per unit of volatility. If you would invest 14,303 in Hilton Worldwide Holdings on October 6, 2024 and sell it today you would earn a total of 9,437 from holding Hilton Worldwide Holdings or generate 65.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Solstad Offshore ASA vs. Hilton Worldwide Holdings
Performance |
Timeline |
Solstad Offshore ASA |
Hilton Worldwide Holdings |
Solstad Offshore and Hilton Worldwide Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Solstad Offshore and Hilton Worldwide
The main advantage of trading using opposite Solstad Offshore and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide's long position.Solstad Offshore vs. AP Mller | Solstad Offshore vs. AP Mller | Solstad Offshore vs. ZIM Integrated Shipping | Solstad Offshore vs. DFDS AS |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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