Correlation Between NH HOTEL and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS, you can compare the effects of market volatilities on NH HOTEL and ELECTRONIC ARTS 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 ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and ELECTRONIC ARTS.
Diversification Opportunities for NH HOTEL and ELECTRONIC ARTS
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NH5 and ELECTRONIC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of NH HOTEL i.e., NH HOTEL and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between NH HOTEL and ELECTRONIC ARTS
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 2.26 times more return on investment than ELECTRONIC ARTS. However, NH HOTEL is 2.26 times more volatile than ELECTRONIC ARTS. It trades about 0.22 of its potential returns per unit of risk. ELECTRONIC ARTS is currently generating about -0.35 per unit of risk. If you would invest 411.00 in NH HOTEL GROUP on October 30, 2024 and sell it today you would earn a total of 208.00 from holding NH HOTEL GROUP or generate 50.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. ELECTRONIC ARTS
Performance |
| Timeline |
| NH HOTEL GROUP |
| ELECTRONIC ARTS |
NH HOTEL and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and ELECTRONIC ARTS
The main advantage of trading using opposite NH HOTEL and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| NH HOTEL vs. China Eastern Airlines | NH HOTEL vs. PLAYMATES TOYS | NH HOTEL vs. FRACTAL GAMING GROUP | NH HOTEL vs. GameStop Corp |
| ELECTRONIC ARTS vs. BJs Wholesale Club | ELECTRONIC ARTS vs. SCOTT TECHNOLOGY | ELECTRONIC ARTS vs. H2O Retailing | ELECTRONIC ARTS vs. AEON STORES |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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