Correlation Between NH HOTEL and Air Lease
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on NH HOTEL and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Air Lease.
Diversification Opportunities for NH HOTEL and Air Lease
Average diversification
The 3 months correlation between NH5 and Air is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of NH HOTEL i.e., NH HOTEL and Air Lease go up and down completely randomly.
Pair Corralation between NH HOTEL and Air Lease
Assuming the 90 days trading horizon NH HOTEL is expected to generate 4.79 times less return on investment than Air Lease. In addition to that, NH HOTEL is 1.31 times more volatile than Air Lease. It trades about 0.06 of its total potential returns per unit of risk. Air Lease is currently generating about 0.39 per unit of volatility. If you would invest 4,120 in Air Lease on August 28, 2024 and sell it today you would earn a total of 720.00 from holding Air Lease or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Air Lease
Performance |
| Timeline |
| NH HOTEL GROUP |
| Air Lease |
NH HOTEL and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Air Lease
The main advantage of trading using opposite NH HOTEL and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.The idea behind NH HOTEL GROUP and Air Lease pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Air Lease vs. Superior Plus Corp | Air Lease vs. NMI Holdings | Air Lease vs. Origin Agritech | Air Lease vs. SIVERS SEMICONDUCTORS AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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