Correlation Between NH HOTEL and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Gladstone Investment 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 NH HOTEL and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH HOTEL GROUP and Gladstone Investment, you can compare the effects of market volatilities on NH HOTEL and Gladstone Investment 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 NH HOTEL with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Gladstone Investment.
Diversification Opportunities for NH HOTEL and Gladstone Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NH5 and Gladstone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and NH 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 NH HOTEL GROUP are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of NH HOTEL i.e., NH HOTEL and Gladstone Investment go up and down completely randomly.
Pair Corralation between NH HOTEL and Gladstone Investment
Assuming the 90 days trading horizon NH HOTEL is expected to generate 5.52 times less return on investment than Gladstone Investment. In addition to that, NH HOTEL is 1.92 times more volatile than Gladstone Investment. It trades about 0.01 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.07 per unit of volatility. If you would invest 928.00 in Gladstone Investment on September 1, 2024 and sell it today you would earn a total of 373.00 from holding Gladstone Investment or generate 40.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Gladstone Investment
Performance |
| Timeline |
| NH HOTEL GROUP |
| Gladstone Investment |
NH HOTEL and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Gladstone Investment
The main advantage of trading using opposite NH HOTEL and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| NH HOTEL vs. SIVERS SEMICONDUCTORS AB | NH HOTEL vs. Darden Restaurants | NH HOTEL vs. Reliance Steel Aluminum | NH HOTEL vs. Q2M Managementberatung AG |
| Gladstone Investment vs. MINCO SILVER | Gladstone Investment vs. Perdoceo Education | Gladstone Investment vs. Grand Canyon Education | Gladstone Investment vs. RYU Apparel |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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