Correlation Between Park Hotels and ANHEUSER

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

Diversification Opportunities for Park Hotels and ANHEUSER

-0.15

Correlation Coefficient

Park Hotels  ANHEUSER

Good diversification

The 3 months correlation between Park and ANHEUSER is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and ANHEUSER BUSCH INBEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANHEUSER BUSCH INBEV 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 ANHEUSER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANHEUSER BUSCH INBEV has no effect on the direction of Park Hotels i.e., Park Hotels and ANHEUSER go up and down completely randomly.

Pair Corralation between Park Hotels and ANHEUSER

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.5 times more return on investment than ANHEUSER. However, Park Hotels is 1.5 times more volatile than ANHEUSER BUSCH INBEV. It trades about 0.13 of its potential returns per unit of risk. ANHEUSER BUSCH INBEV is currently generating about -0.11 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	Insignificant
Accuracy	84.13%
Values	Daily Returns

Park Hotels Resorts  vs.  ANHEUSER BUSCH INBEV

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.

ANHEUSER BUSCH INBEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANHEUSER BUSCH INBEV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ANHEUSER BUSCH INBEV investors.

Pair Trading with Park Hotels and ANHEUSER

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

The idea behind Park Hotels Resorts and ANHEUSER BUSCH INBEV 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.