Correlation Between Cytokinetics and Park Hotels

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Can any of the company-specific risk be diversified away by investing in both Cytokinetics and Park 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 Cytokinetics and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cytokinetics and Park Hotels Resorts, you can compare the effects of market volatilities on Cytokinetics and Park 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 Cytokinetics with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cytokinetics and Park Hotels.

Diversification Opportunities for Cytokinetics and Park Hotels

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cytokinetics and Park Hotels is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cytokinetics and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and Cytokinetics 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 Cytokinetics are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Cytokinetics i.e., Cytokinetics and Park Hotels go up and down completely randomly.

Pair Corralation between Cytokinetics and Park Hotels

Given the investment horizon of 90 days Cytokinetics is expected to under-perform the Park Hotels. In addition to that, Cytokinetics is 1.08 times more volatile than Park Hotels Resorts. It trades about -0.08 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.07 per unit of volatility. If you would invest  1,303  in Park Hotels Resorts on August 29, 2022 and sell it today you would lose (62.00)  from holding Park Hotels Resorts or give up 4.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cytokinetics  vs.  Park Hotels Resorts

 Performance (%) 
       Timeline  
Cytokinetics 
Cytokinetics Performance
0 of 100
Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2022. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cytokinetics Price Channel

Park Hotels Resorts 
Park Hotels Performance
0 of 100
Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward-looking signals remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Park Hotels Price Channel

Cytokinetics and Park Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cytokinetics and Park Hotels

The main advantage of trading using opposite Cytokinetics and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cytokinetics position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.
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The idea behind Cytokinetics and Park Hotels Resorts 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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