Correlation Between Hyatt Hotels and BTC Digital

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

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

Diversification Opportunities for Hyatt Hotels and BTC Digital

0.42

Correlation Coefficient

Hyatt Hotels  BTC Digital

Very weak diversification

The 3 months correlation between Hyatt and BTC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital 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 BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and BTC Digital go up and down completely randomly.

Pair Corralation between Hyatt Hotels and BTC Digital

Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 48.24 times less return on investment than BTC Digital. But when comparing it to its historical volatility, Hyatt Hotels is 15.32 times less risky than BTC Digital. It trades about 0.04 of its potential returns per unit of risk. BTC Digital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.12  in BTC Digital on September 3, 2024 and sell it today you would earn a total of  4.78  from holding BTC Digital or generate 153.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.2%
Values	Daily Returns

Hyatt Hotels  vs.  BTC Digital

Hyatt Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 3 (%) 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.

BTC Digital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BTC Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyatt Hotels and BTC Digital

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

The idea behind Hyatt Hotels and BTC Digital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.