Correlation Between Dave and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Dave 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 Dave and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Inc and Hyatt Hotels, you can compare the effects of market volatilities on Dave 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 Dave with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave and Hyatt Hotels.
Diversification Opportunities for Dave and Hyatt Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dave and Hyatt is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dave Inc and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Dave 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 Dave Inc 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 Dave i.e., Dave and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Dave and Hyatt Hotels
Given the investment horizon of 90 days Dave Inc is expected to generate 3.64 times more return on investment than Hyatt Hotels. However, Dave is 3.64 times more volatile than Hyatt Hotels. It trades about -0.02 of its potential returns per unit of risk. Hyatt Hotels is currently generating about -0.31 per unit of risk. If you would invest 3,503 in Dave Inc on January 20, 2024 and sell it today you would lose (92.00) from holding Dave Inc or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Inc vs. Hyatt Hotels
Performance |
| Timeline |
| Dave Inc |
| Hyatt Hotels |
Dave and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave and Hyatt Hotels
The main advantage of trading using opposite Dave and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave 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 Dave Inc 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.| Hyatt Hotels vs. Yatra Online | Hyatt Hotels vs. Despegar Corp | Hyatt Hotels vs. Mondee Holdings | Hyatt 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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