Correlation Between NH HOTEL and Sixt Leasing
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Sixt Leasing 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 Sixt Leasing 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 Sixt Leasing SE, you can compare the effects of market volatilities on NH HOTEL and Sixt Leasing 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 Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Sixt Leasing.
Diversification Opportunities for NH HOTEL and Sixt Leasing
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NH5 and Sixt is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of NH HOTEL i.e., NH HOTEL and Sixt Leasing go up and down completely randomly.
Pair Corralation between NH HOTEL and Sixt Leasing
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 1.47 times more return on investment than Sixt Leasing. However, NH HOTEL is 1.47 times more volatile than Sixt Leasing SE. It trades about 0.06 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.17 per unit of risk. If you would invest 412.00 in NH HOTEL GROUP on August 28, 2024 and sell it today you would earn a total of 12.00 from holding NH HOTEL GROUP or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Sixt Leasing SE
Performance |
| Timeline |
| NH HOTEL GROUP |
| Sixt Leasing SE |
NH HOTEL and Sixt Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Sixt Leasing
The main advantage of trading using opposite NH HOTEL and Sixt Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Sixt Leasing 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 Sixt Leasing will offset losses from the drop in Sixt Leasing's long position.The idea behind NH HOTEL GROUP and Sixt Leasing SE 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.| Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc | Sixt Leasing vs. Apple Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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