Correlation Between Park Hotels and One Liberty

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

Diversification Opportunities for Park Hotels and One Liberty

0.27

Correlation Coefficient

Park Hotels  One Liberty

Modest diversification

The 3 months correlation between Park and One is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Park Hotels i.e., Park Hotels and One Liberty go up and down completely randomly.

Pair Corralation between Park Hotels and One Liberty

Allowing for the 90-day total investment horizon Park Hotels is expected to generate 1.08 times less return on investment than One Liberty. But when comparing it to its historical volatility, Park Hotels Resorts is 1.0 times less risky than One Liberty. It trades about 0.11 of its potential returns per unit of risk. One Liberty Properties is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,725  in One Liberty Properties on August 20, 2024 and sell it today you would earn a total of  113.00  from holding One Liberty Properties or generate 4.15% return on investment over 90 days.

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

Park Hotels Resorts  vs.  One Liberty Properties

Park Hotels Resorts

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Park Hotels is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

One Liberty Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, One Liberty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Park Hotels and One Liberty

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

The idea behind Park Hotels Resorts and One Liberty Properties 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 Global Correlations module to find global opportunities by holding instruments from different markets.