Correlation Between LEGACY IRON and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON and NH 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 LEGACY IRON and NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and NH HOTEL GROUP, you can compare the effects of market volatilities on LEGACY IRON and NH 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 LEGACY IRON with a short position of NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and NH HOTEL.
Diversification Opportunities for LEGACY IRON and NH HOTEL
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between LEGACY and NH5 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP and LEGACY IRON 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 LEGACY IRON ORE are associated (or correlated) with NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of LEGACY IRON i.e., LEGACY IRON and NH HOTEL go up and down completely randomly.
Pair Corralation between LEGACY IRON and NH HOTEL
Assuming the 90 days trading horizon LEGACY IRON ORE is expected to under-perform the NH HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, LEGACY IRON ORE is 4.72 times less risky than NH HOTEL. The stock trades about -0.08 of its potential returns per unit of risk. The NH HOTEL GROUP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 383.00 in NH HOTEL GROUP on September 1, 2024 and sell it today you would earn a total of 28.00 from holding NH HOTEL GROUP or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGACY IRON ORE vs. NH HOTEL GROUP
Performance |
| Timeline |
| LEGACY IRON ORE |
| NH HOTEL GROUP |
LEGACY IRON and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and NH HOTEL
The main advantage of trading using opposite LEGACY IRON and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON position performs unexpectedly, NH 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.| LEGACY IRON vs. SIVERS SEMICONDUCTORS AB | LEGACY IRON vs. Darden Restaurants | LEGACY IRON vs. Reliance Steel Aluminum | LEGACY IRON vs. Q2M Managementberatung AG |
| NH HOTEL vs. SIVERS SEMICONDUCTORS AB | NH HOTEL vs. Darden Restaurants | NH HOTEL vs. Reliance Steel Aluminum | NH HOTEL vs. Q2M Managementberatung AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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