Correlation Between Park Hotels and American Healthcare
Can any of the company-specific risk be diversified away by investing in both Park Hotels and American Healthcare 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 Park Hotels and American Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and American Healthcare REIT,, you can compare the effects of market volatilities on Park Hotels and American Healthcare 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 Park Hotels with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and American Healthcare.
Diversification Opportunities for Park Hotels and American Healthcare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and Park 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 Park Hotels Resorts are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of Park Hotels i.e., Park Hotels and American Healthcare go up and down completely randomly.
Pair Corralation between Park Hotels and American Healthcare
Allowing for the 90-day total investment horizon Park Hotels is expected to generate 25.02 times less return on investment than American Healthcare. But when comparing it to its historical volatility, Park Hotels Resorts is 1.04 times less risky than American Healthcare. It trades about 0.01 of its potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,516 in American Healthcare REIT, on September 19, 2024 and sell it today you would earn a total of 319.00 from holding American Healthcare REIT, or generate 12.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Park Hotels Resorts vs. American Healthcare REIT,
Performance |
Timeline |
Park Hotels Resorts |
American Healthcare REIT, |
Park Hotels and American Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Hotels and American Healthcare
The main advantage of trading using opposite Park Hotels and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, American Healthcare 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 American Healthcare will offset losses from the drop in American Healthcare's long position.Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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