Correlation Between Hyatt Hotels and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and NorthWestern 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 NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and NorthWestern, you can compare the effects of market volatilities on Hyatt Hotels and NorthWestern 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 NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and NorthWestern.
Diversification Opportunities for Hyatt Hotels and NorthWestern
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and NorthWestern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern 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 NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and NorthWestern go up and down completely randomly.
Pair Corralation between Hyatt Hotels and NorthWestern
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 1.5 times more return on investment than NorthWestern. However, Hyatt Hotels is 1.5 times more volatile than NorthWestern. It trades about 0.14 of its potential returns per unit of risk. NorthWestern is currently generating about 0.1 per unit of risk. If you would invest 13,031 in Hyatt Hotels on January 26, 2024 and sell it today you would earn a total of 2,152 from holding Hyatt Hotels or generate 16.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. NorthWestern
Performance |
| Timeline |
| Hyatt Hotels |
| NorthWestern |
Hyatt Hotels and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and NorthWestern
The main advantage of trading using opposite Hyatt Hotels and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Hyatt Hotels vs. Yatra Online | Hyatt Hotels vs. Despegar Corp | Hyatt Hotels vs. Mondee Holdings | Hyatt Hotels vs. MakeMyTrip Limited |
| NorthWestern vs. Allete Inc | NorthWestern vs. The AES | NorthWestern vs. Black Hills | NorthWestern vs. Montauk Renewables |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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