Correlation Between Hyatt Hotels and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Choice 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 Hyatt Hotels and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Choice Hotels International, you can compare the effects of market volatilities on Hyatt Hotels and Choice 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 Hyatt Hotels with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Choice Hotels.
Diversification Opportunities for Hyatt Hotels and Choice Hotels
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyatt and Choice is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Hyatt Hotels 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 Hyatt Hotels are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Choice Hotels go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Choice Hotels
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.19 times more return on investment than Choice Hotels. However, Hyatt Hotels is 1.19 times more volatile than Choice Hotels International. It trades about 0.06 of its potential returns per unit of risk. Choice Hotels International is currently generating about -0.02 per unit of risk. If you would invest 12,473 in Hyatt Hotels on January 24, 2024 and sell it today you would earn a total of 2,185 from holding Hyatt Hotels or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Choice Hotels International
Performance |
| Timeline |
| Hyatt Hotels |
| Choice Hotels Intern |
Hyatt Hotels and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Choice Hotels
The main advantage of trading using opposite Hyatt Hotels and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Choice 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Hyatt Hotels vs. Yatra Online | Hyatt Hotels vs. Despegar Corp | Hyatt Hotels vs. Mondee Holdings | Hyatt Hotels vs. MakeMyTrip Limited |
| Choice Hotels vs. Yatra Online | Choice Hotels vs. Despegar Corp | Choice Hotels vs. Mondee Holdings | Choice Hotels vs. MakeMyTrip Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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