Correlation Between Bank of America and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and NH HOTEL GROUP, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NH HOTEL.
Diversification Opportunities for Bank of America and NH HOTEL
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and NH5 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and NH HOTEL go up and down completely randomly.
Pair Corralation between Bank of America and NH HOTEL
Considering the 90-day investment horizon Bank of America is expected to under-perform the NH HOTEL. In addition to that, Bank of America is 4.12 times more volatile than NH HOTEL GROUP. It trades about -0.11 of its total potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.0 per unit of volatility. If you would invest 628.00 in NH HOTEL GROUP on January 11, 2025 and sell it today you would earn a total of 0.00 from holding NH HOTEL GROUP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. NH HOTEL GROUP
Performance |
| Timeline |
| Bank of America |
| NH HOTEL GROUP |
Risk-Adjusted Performance
Weak
Weak | Strong |
Bank of America and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NH HOTEL
The main advantage of trading using opposite Bank of America and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| NH HOTEL vs. Japan Tobacco | NH HOTEL vs. Rocket Internet SE | NH HOTEL vs. Xinhua Winshare Publishing | NH HOTEL vs. Computer And Technologies |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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