Correlation Between WW International and Hyatt Hotels

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

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

Diversification Opportunities for WW International and Hyatt Hotels

-0.82

Correlation Coefficient

WW International  Hyatt Hotels

Pay attention - limited upside

The 3 months correlation between WW International and Hyatt is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding WW International and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and WW International 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 WW International are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of WW International i.e., WW International and Hyatt Hotels go up and down completely randomly.

Pair Corralation between WW International and Hyatt Hotels

Allowing for the 90-day total investment horizon WW International is expected to generate 2.79 times less return on investment than Hyatt Hotels. In addition to that, WW International is 4.53 times more volatile than Hyatt Hotels. It trades about 0.01 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.1 per unit of volatility. If you would invest  8,836  in Hyatt Hotels on January 28, 2024 and sell it today you would earn a total of  6,296  from holding Hyatt Hotels or generate 71.25% return on investment over 90 days.

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

WW International  vs.  Hyatt Hotels

WW International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WW International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hyatt Hotels

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Hyatt Hotels demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WW International and Hyatt Hotels

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

The idea behind WW International and Hyatt Hotels 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.