Correlation Between Tandem Diabetes and Park Hotels

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

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

Diversification Opportunities for Tandem Diabetes and Park Hotels

-0.15

Correlation Coefficient

Tandem Diabetes  Park Hotels

Good diversification

The 3 months correlation between Tandem and Park is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tandem Diabetes Care 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 Tandem Diabetes 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 Tandem Diabetes Care 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 Tandem Diabetes i.e., Tandem Diabetes and Park Hotels go up and down completely randomly.

Pair Corralation between Tandem Diabetes and Park Hotels

Given the investment horizon of 90 days Tandem Diabetes Care is expected to generate 2.09 times more return on investment than Park Hotels. However, Tandem Diabetes is 2.09 times more volatile than Park Hotels Resorts. It trades about 0.01 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest  4,074  in Tandem Diabetes Care on October 22, 2024 and sell it today you would lose (559.00) from holding Tandem Diabetes Care or give up 13.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Tandem Diabetes Care  vs.  Park Hotels Resorts

Tandem Diabetes Care

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tandem Diabetes Care are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tandem Diabetes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Park Hotels Resorts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 2 (%) 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 Tandem Diabetes and Park Hotels

The main advantage of trading using opposite Tandem Diabetes and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandem Diabetes 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 Tandem Diabetes Care 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.