Correlation Between Ford and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hyatt Hotels, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hyatt Hotels.
Diversification Opportunities for Ford and Hyatt Hotels
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Hyatt is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Ford 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 Ford Motor 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 Ford i.e., Ford and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Ford and Hyatt Hotels
Taking into account the 90-day investment horizon Ford is expected to generate 3.29 times less return on investment than Hyatt Hotels. In addition to that, Ford is 1.2 times more volatile than Hyatt Hotels. It trades about 0.02 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.07 per unit of volatility. If you would invest 8,507 in Hyatt Hotels on January 26, 2024 and sell it today you would earn a total of 6,676 from holding Hyatt Hotels or generate 78.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Hyatt Hotels
Performance |
| Timeline |
| Ford Motor |
| Hyatt Hotels |
Ford and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hyatt Hotels
The main advantage of trading using opposite Ford and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |