Correlation Between Walmart and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both Walmart and HYATT 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 Walmart and HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and HYATT HOTELS A, you can compare the effects of market volatilities on Walmart and HYATT 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 Walmart with a short position of HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and HYATT HOTELS.
Diversification Opportunities for Walmart and HYATT HOTELS
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and HYATT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and Walmart 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 Walmart are associated (or correlated) with HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Walmart i.e., Walmart and HYATT HOTELS go up and down completely randomly.
Pair Corralation between Walmart and HYATT HOTELS
Assuming the 90 days trading horizon Walmart is expected to generate 0.72 times more return on investment than HYATT HOTELS. However, Walmart is 1.4 times less risky than HYATT HOTELS. It trades about 0.21 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.06 per unit of risk. If you would invest 7,684 in Walmart on October 24, 2024 and sell it today you would earn a total of 1,327 from holding Walmart or generate 17.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walmart vs. HYATT HOTELS A
Performance |
Timeline |
Walmart |
HYATT HOTELS A |
Walmart and HYATT HOTELS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and HYATT HOTELS
The main advantage of trading using opposite Walmart and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, HYATT 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.Walmart vs. SOCKET MOBILE NEW | Walmart vs. COVIVIO HOTELS INH | Walmart vs. KENEDIX OFFICE INV | Walmart vs. Iridium Communications |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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