Correlation Between Hyatt Hotels and SIERRA METALS

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

By analyzing existing cross correlation between Hyatt Hotels and SIERRA METALS, you can compare the effects of market volatilities on Hyatt Hotels and SIERRA METALS 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 SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and SIERRA METALS.

Diversification Opportunities for Hyatt Hotels and SIERRA METALS

-0.36

Correlation Coefficient

Hyatt Hotels  SIERRA METALS

Very good diversification

The 3 months correlation between Hyatt and SIERRA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA METALS 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 SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and SIERRA METALS go up and down completely randomly.

Pair Corralation between Hyatt Hotels and SIERRA METALS

Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 0.6 times more return on investment than SIERRA METALS. However, Hyatt Hotels is 1.65 times less risky than SIERRA METALS. It trades about 0.09 of its potential returns per unit of risk. SIERRA METALS is currently generating about 0.05 per unit of risk. If you would invest  13,801  in Hyatt Hotels on September 26, 2024 and sell it today you would earn a total of  1,409  from holding Hyatt Hotels or generate 10.21% return on investment over 90 days.

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

Hyatt Hotels  vs.  SIERRA METALS

Hyatt Hotels

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SIERRA METALS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIERRA METALS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SIERRA METALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyatt Hotels and SIERRA METALS

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

The idea behind Hyatt Hotels and SIERRA METALS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.