Correlation Between Hilton Worldwide and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide 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 Hilton Worldwide and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Hyatt Hotels, you can compare the effects of market volatilities on Hilton Worldwide 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 Hilton Worldwide with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Hyatt Hotels.
Diversification Opportunities for Hilton Worldwide and Hyatt Hotels
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hilton and Hyatt is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Hyatt Hotels
Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to under-perform the Hyatt Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Worldwide Holdings is 1.05 times less risky than Hyatt Hotels. The stock trades about -0.27 of its potential returns per unit of risk. The Hyatt Hotels is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 15,785 in Hyatt Hotels on January 25, 2024 and sell it today you would lose (804.00) from holding Hyatt Hotels or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Hyatt Hotels
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Hyatt Hotels |
Hilton Worldwide and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Hyatt Hotels
The main advantage of trading using opposite Hilton Worldwide and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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.| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip Limited |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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