Correlation Between Hyatt Hotels and Home Depot
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Home Depot 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 Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Home Depot, you can compare the effects of market volatilities on Hyatt Hotels and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Home Depot.
Diversification Opportunities for Hyatt Hotels and Home Depot
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyatt and Home is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Home Depot go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Home Depot
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 0.79 times more return on investment than Home Depot. However, Hyatt Hotels is 1.26 times less risky than Home Depot. It trades about -0.36 of its potential returns per unit of risk. Home Depot is currently generating about -0.5 per unit of risk. If you would invest 15,785 in Hyatt Hotels on January 24, 2024 and sell it today you would lose (1,127) from holding Hyatt Hotels or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Home Depot
Performance |
| Timeline |
| Hyatt Hotels |
| Home Depot |
Hyatt Hotels and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Home Depot
The main advantage of trading using opposite Hyatt Hotels and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Hyatt Hotels vs. Yatra Online | Hyatt Hotels vs. Despegar Corp | Hyatt Hotels vs. Mondee Holdings | Hyatt Hotels vs. MakeMyTrip Limited |
| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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