Correlation Between Park Hotels and Salesforce

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Can any of the company-specific risk be diversified away by investing in both Park Hotels and Salesforce 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 Salesforce 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 Salesforce, you can compare the effects of market volatilities on Park Hotels and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Salesforce.

Diversification Opportunities for Park Hotels and Salesforce

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Park and Salesforce is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Park Hotels i.e., Park Hotels and Salesforce go up and down completely randomly.

Pair Corralation between Park Hotels and Salesforce

Allowing for the 90-day total investment horizon Park Hotels is expected to generate 3.32 times less return on investment than Salesforce. In addition to that, Park Hotels is 1.21 times more volatile than Salesforce. It trades about 0.02 of its total potential returns per unit of risk. Salesforce is currently generating about 0.09 per unit of volatility. If you would invest  27,677  in Salesforce on November 24, 2023 and sell it today you would earn a total of  678.00  from holding Salesforce or generate 2.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Park Hotels Resorts  vs.  Salesforce

 Performance 
       Timeline  
Park Hotels Resorts 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in March 2024.
Salesforce 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Park Hotels and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Park Hotels and Salesforce

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