Correlation Between Park Hotels and Armada Hflr

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

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

Diversification Opportunities for Park Hotels and Armada Hflr

-0.55

Correlation Coefficient

Park Hotels  Armada Hflr

Excellent diversification

The 3 months correlation between Park and Armada is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr and Park 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 Park Hotels Resorts are associated (or correlated) with Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Park Hotels i.e., Park Hotels and Armada Hflr go up and down completely randomly.

Pair Corralation between Park Hotels and Armada Hflr

Allowing for the 90-day total investment horizon Park Hotels is expected to generate 128.46 times less return on investment than Armada Hflr. In addition to that, Park Hotels is 1.01 times more volatile than Armada Hflr Pr. It trades about 0.0 of its total potential returns per unit of risk. Armada Hflr Pr is currently generating about 0.2 per unit of volatility. If you would invest  1,072  in Armada Hflr Pr on February 21, 2024 and sell it today you would earn a total of  69.00  from holding Armada Hflr Pr or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Park Hotels Resorts  vs.  Armada Hflr Pr

Park Hotels Resorts

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Armada Hflr Pr

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Hflr Pr are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Park Hotels and Armada Hflr

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

The idea behind Park Hotels Resorts and Armada Hflr Pr 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.