Correlation Between Park Hotels and Public Storage

Can any of the company-specific risk be diversified away by investing in both Park Hotels and Public Storage 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 Public Storage 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 Public Storage, you can compare the effects of market volatilities on Park Hotels and Public Storage 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 Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Public Storage.

Diversification Opportunities for Park Hotels and Public Storage

-0.53

Correlation Coefficient

Park Hotels  Public Storage

Excellent diversification

The 3 months correlation between Park and Public is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Park Hotels i.e., Park Hotels and Public Storage go up and down completely randomly.

Pair Corralation between Park Hotels and Public Storage

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 2.08 times more return on investment than Public Storage. However, Park Hotels is 2.08 times more volatile than Public Storage. It trades about 0.13 of its potential returns per unit of risk. Public Storage is currently generating about -0.15 per unit of risk. If you would invest  1,355  in Park Hotels Resorts on September 12, 2024 and sell it today you would earn a total of  206.00  from holding Park Hotels Resorts or generate 15.2% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Public Storage

Park Hotels Resorts

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Park Hotels disclosed solid returns over the last few months and may actually be approaching a breakup point.

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Park Hotels and Public Storage

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

The idea behind Park Hotels Resorts and Public Storage 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.