Correlation Between Hyatt Hotels and Expedia
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Expedia 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 Hyatt Hotels and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Expedia Group, you can compare the effects of market volatilities on Hyatt Hotels and Expedia 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 Hyatt Hotels with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Expedia.
Diversification Opportunities for Hyatt Hotels and Expedia
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyatt and Expedia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Hyatt 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 Hyatt Hotels are associated (or correlated) with Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Expedia go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Expedia
Taking into account the 90-day investment horizon Hyatt Hotels is expected to under-perform the Expedia. But the stock apears to be less risky and, when comparing its historical volatility, Hyatt Hotels is 1.18 times less risky than Expedia. The stock trades about -0.14 of its potential returns per unit of risk. The Expedia Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 13,731 in Expedia Group on January 25, 2024 and sell it today you would lose (149.00) from holding Expedia Group or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Expedia Group
Performance |
| Timeline |
| Hyatt Hotels |
| Expedia Group |
Hyatt Hotels and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Expedia
The main advantage of trading using opposite Hyatt Hotels and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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