Correlation Between H World and Hilton Worldwide

Can any of the company-specific risk be diversified away by investing in both H World and Hilton Worldwide 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 H World and Hilton Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H World Group and Hilton Worldwide Holdings, you can compare the effects of market volatilities on H World and Hilton Worldwide 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 H World with a short position of Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of H World and Hilton Worldwide.

Diversification Opportunities for H World and Hilton Worldwide

-0.12

Correlation Coefficient

H World  Hilton Worldwide

Good diversification

The 3 months correlation between CL4A and Hilton is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding H World Group and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings and H World 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 H World Group are associated (or correlated) with Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of H World i.e., H World and Hilton Worldwide go up and down completely randomly.

Pair Corralation between H World and Hilton Worldwide

Assuming the 90 days trading horizon H World Group is expected to under-perform the Hilton Worldwide. In addition to that, H World is 2.41 times more volatile than Hilton Worldwide Holdings. It trades about -0.05 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about -0.07 per unit of volatility. If you would invest  23,900  in Hilton Worldwide Holdings on September 23, 2024 and sell it today you would lose (420.00) from holding Hilton Worldwide Holdings or give up 1.76% of portfolio value over 90 days.

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

H World Group  vs.  Hilton Worldwide Holdings

H World Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in H World Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, H World reported solid returns over the last few months and may actually be approaching a breakup point.

Hilton Worldwide Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hilton Worldwide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H World and Hilton Worldwide

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

The idea behind H World Group and Hilton Worldwide Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.