Correlation Between NIPPON PROLOGIS and REGAL HOTEL
Can any of the company-specific risk be diversified away by investing in both NIPPON PROLOGIS and REGAL HOTEL 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 NIPPON PROLOGIS and REGAL HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON PROLOGIS REIT and REGAL HOTEL INTL, you can compare the effects of market volatilities on NIPPON PROLOGIS and REGAL HOTEL 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 NIPPON PROLOGIS with a short position of REGAL HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON PROLOGIS and REGAL HOTEL.
Diversification Opportunities for NIPPON PROLOGIS and REGAL HOTEL
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NIPPON and REGAL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL INTL and NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT are associated (or correlated) with REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of NIPPON PROLOGIS i.e., NIPPON PROLOGIS and REGAL HOTEL go up and down completely randomly.
Pair Corralation between NIPPON PROLOGIS and REGAL HOTEL
Assuming the 90 days trading horizon NIPPON PROLOGIS REIT is expected to generate 0.68 times more return on investment than REGAL HOTEL. However, NIPPON PROLOGIS REIT is 1.47 times less risky than REGAL HOTEL. It trades about 0.27 of its potential returns per unit of risk. REGAL HOTEL INTL is currently generating about 0.08 per unit of risk. If you would invest 136,000 in NIPPON PROLOGIS REIT on November 4, 2024 and sell it today you would earn a total of 13,000 from holding NIPPON PROLOGIS REIT or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON PROLOGIS REIT vs. REGAL HOTEL INTL
Performance |
| Timeline |
| NIPPON PROLOGIS REIT |
| REGAL HOTEL INTL |
NIPPON PROLOGIS and REGAL HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON PROLOGIS and REGAL HOTEL
The main advantage of trading using opposite NIPPON PROLOGIS and REGAL HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON PROLOGIS position performs unexpectedly, REGAL HOTEL 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 REGAL HOTEL will offset losses from the drop in REGAL HOTEL's long position.| NIPPON PROLOGIS vs. Synovus Financial Corp | NIPPON PROLOGIS vs. OAKTRSPECLENDNEW | NIPPON PROLOGIS vs. Chiba Bank | NIPPON PROLOGIS vs. CDL INVESTMENT |
| REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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