Correlation Between AdvisorShares Hotel and Natuzzi SpA
Can any of the company-specific risk be diversified away by investing in both AdvisorShares Hotel and Natuzzi SpA 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 AdvisorShares Hotel and Natuzzi SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares Hotel ETF and Natuzzi SpA, you can compare the effects of market volatilities on AdvisorShares Hotel and Natuzzi SpA 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 AdvisorShares Hotel with a short position of Natuzzi SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Hotel and Natuzzi SpA.
Diversification Opportunities for AdvisorShares Hotel and Natuzzi SpA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AdvisorShares and Natuzzi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Hotel ETF and Natuzzi SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natuzzi SpA and AdvisorShares Hotel 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 AdvisorShares Hotel ETF are associated (or correlated) with Natuzzi SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natuzzi SpA has no effect on the direction of AdvisorShares Hotel i.e., AdvisorShares Hotel and Natuzzi SpA go up and down completely randomly.
Pair Corralation between AdvisorShares Hotel and Natuzzi SpA
Given the investment horizon of 90 days AdvisorShares Hotel is expected to generate 1.25 times less return on investment than Natuzzi SpA. But when comparing it to its historical volatility, AdvisorShares Hotel ETF is 2.92 times less risky than Natuzzi SpA. It trades about 0.34 of its potential returns per unit of risk. Natuzzi SpA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Natuzzi SpA on September 3, 2024 and sell it today you would earn a total of 34.00 from holding Natuzzi SpA or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
AdvisorShares Hotel ETF vs. Natuzzi SpA
Performance |
| Timeline |
| AdvisorShares Hotel ETF |
| Natuzzi SpA |
AdvisorShares Hotel and Natuzzi SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares Hotel and Natuzzi SpA
The main advantage of trading using opposite AdvisorShares Hotel and Natuzzi SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Hotel position performs unexpectedly, Natuzzi SpA 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 Natuzzi SpA will offset losses from the drop in Natuzzi SpA's long position.| AdvisorShares Hotel vs. Smith Nephew SNATS | AdvisorShares Hotel vs. Fresenius Medical Care | AdvisorShares Hotel vs. Fomento Economico Mexicano | AdvisorShares Hotel vs. The Cooper Companies, |
| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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