Correlation Between Hyatt Hotels and AutoNation
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and AutoNation 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 AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and AutoNation, you can compare the effects of market volatilities on Hyatt Hotels and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and AutoNation.
Diversification Opportunities for Hyatt Hotels and AutoNation
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and AutoNation is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and AutoNation go up and down completely randomly.
Pair Corralation between Hyatt Hotels and AutoNation
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 0.81 times more return on investment than AutoNation. However, Hyatt Hotels is 1.23 times less risky than AutoNation. It trades about 0.09 of its potential returns per unit of risk. AutoNation is currently generating about 0.04 per unit of risk. If you would invest 7,477 in Hyatt Hotels on January 25, 2024 and sell it today you would earn a total of 7,706 from holding Hyatt Hotels or generate 103.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Hyatt Hotels vs. AutoNation
Performance |
| Timeline |
| Hyatt Hotels |
| AutoNation |
Hyatt Hotels and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and AutoNation
The main advantage of trading using opposite Hyatt Hotels and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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