Correlation Between Bright Horizons and Hyatt Hotels

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

By analyzing existing cross correlation between Bright Horizons Family and Hyatt Hotels, you can compare the effects of market volatilities on Bright Horizons and Hyatt Hotels 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 Bright Horizons with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Horizons and Hyatt Hotels.

Diversification Opportunities for Bright Horizons and Hyatt Hotels

-0.46

Correlation Coefficient

Bright Horizons  Hyatt Hotels

Very good diversification

The 3 months correlation between Bright and Hyatt is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bright Horizons Family and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and Bright Horizons 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 Bright Horizons Family are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Bright Horizons i.e., Bright Horizons and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Bright Horizons and Hyatt Hotels

Given the investment horizon of 90 days Bright Horizons Family is expected to under-perform the Hyatt Hotels. In addition to that, Bright Horizons is 1.04 times more volatile than Hyatt Hotels. It trades about -0.2 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.02 per unit of volatility. If you would invest  15,474  in Hyatt Hotels on September 20, 2024 and sell it today you would earn a total of  290.00  from holding Hyatt Hotels or generate 1.87% return on investment over 90 days.

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

Bright Horizons Family  vs.  Hyatt Hotels

Bright Horizons Family

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Horizons Family has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hyatt Hotels

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Bright Horizons and Hyatt Hotels

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

The idea behind Bright Horizons Family and Hyatt Hotels 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..