Correlation Between Hyatt Hotels and Sonder Holdings

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

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

Diversification Opportunities for Hyatt Hotels and Sonder Holdings

-0.38

Correlation Coefficient

Hyatt Hotels  Sonder Holdings

Very good diversification

The 3 months correlation between Hyatt and Sonder is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Sonder Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonder Holdings 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 Sonder Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonder Holdings has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Sonder Holdings go up and down completely randomly.

Pair Corralation between Hyatt Hotels and Sonder Holdings

Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 6.48 times less return on investment than Sonder Holdings. But when comparing it to its historical volatility, Hyatt Hotels is 9.57 times less risky than Sonder Holdings. It trades about 0.12 of its potential returns per unit of risk. Sonder Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  283.00  in Sonder Holdings on September 5, 2024 and sell it today you would earn a total of  71.00  from holding Sonder Holdings or generate 25.09% 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.  Sonder Holdings

Hyatt Hotels

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sonder Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonder Holdings 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hyatt Hotels and Sonder Holdings

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

The idea behind Hyatt Hotels and Sonder 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.