Correlation Between Bank of America and NH Hoteles
Can any of the company-specific risk be diversified away by investing in both Bank of America and NH Hoteles 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 Hoteles 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 Hoteles, you can compare the effects of market volatilities on Bank of America and NH Hoteles 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 Hoteles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NH Hoteles.
Diversification Opportunities for Bank of America and NH Hoteles
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and NHH is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and NH Hoteles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Hoteles 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 Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Hoteles has no effect on the direction of Bank of America i.e., Bank of America and NH Hoteles go up and down completely randomly.
Pair Corralation between Bank of America and NH Hoteles
If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Bank of America vs. NH Hoteles
Performance |
| Timeline |
| Bank of America |
| NH Hoteles |
Bank of America and NH Hoteles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NH Hoteles
The main advantage of trading using opposite Bank of America and NH Hoteles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NH Hoteles 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 Hoteles will offset losses from the drop in NH Hoteles' long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| NH Hoteles vs. International Consolidated Airlines | NH Hoteles vs. Merlin Properties SOCIMI | NH Hoteles vs. Aena SA | NH Hoteles vs. Acerinox |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |