Correlation Between Host Hotels and Titan Machinery

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

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

Diversification Opportunities for Host Hotels and Titan Machinery

0.66

Correlation Coefficient

Host Hotels  Titan Machinery

Poor diversification

The 3 months correlation between Host and Titan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Host 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 Host Hotels Resorts are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Host Hotels i.e., Host Hotels and Titan Machinery go up and down completely randomly.

Pair Corralation between Host Hotels and Titan Machinery

Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.79 times more return on investment than Titan Machinery. However, Host Hotels Resorts is 1.27 times less risky than Titan Machinery. It trades about 0.12 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.09 per unit of risk. If you would invest  1,185  in Host Hotels Resorts on April 24, 2025 and sell it today you would earn a total of  175.00  from holding Host Hotels Resorts or generate 14.77% return on investment over 90 days.

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

Host Hotels Resorts  vs.  Titan Machinery

Host Hotels Resorts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Host Hotels Resorts are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Host Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Titan Machinery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Titan Machinery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Host Hotels and Titan Machinery

The main advantage of trading using opposite Host Hotels and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.

The idea behind Host Hotels Resorts and Titan Machinery 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.