Correlation Between Whitbread PLC and Hyatt Hotels

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

By analyzing existing cross correlation between Whitbread PLC ADR and Hyatt Hotels, you can compare the effects of market volatilities on Whitbread PLC 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 Whitbread PLC with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitbread PLC and Hyatt Hotels.

Diversification Opportunities for Whitbread PLC and Hyatt Hotels

0.72

Correlation Coefficient

Whitbread PLC  Hyatt Hotels

Poor diversification

The 3 months correlation between Whitbread and Hyatt is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Whitbread PLC ADR and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Whitbread PLC 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 Whitbread PLC ADR 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 has no effect on the direction of Whitbread PLC i.e., Whitbread PLC and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Whitbread PLC and Hyatt Hotels

Assuming the 90 days horizon Whitbread PLC ADR is expected to generate 0.89 times more return on investment than Hyatt Hotels. However, Whitbread PLC ADR is 1.12 times less risky than Hyatt Hotels. It trades about -0.07 of its potential returns per unit of risk. Hyatt Hotels is currently generating about -0.18 per unit of risk. If you would invest  921.00  in Whitbread PLC ADR on December 20, 2024 and sell it today you would lose (80.00) from holding Whitbread PLC ADR or give up 8.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Whitbread PLC ADR  vs.  Hyatt Hotels

Whitbread PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Whitbread PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hyatt Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyatt Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Whitbread PLC and Hyatt Hotels

The main advantage of trading using opposite Whitbread PLC and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitbread PLC 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' long position.

The idea behind Whitbread PLC ADR and Hyatt Hotels 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.