Correlation Between NH HOTEL and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Playa Hotels 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 Playa Hotels 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 Playa Hotels Resorts, you can compare the effects of market volatilities on NH HOTEL and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Playa Hotels.
Diversification Opportunities for NH HOTEL and Playa Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NH5 and Playa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of NH HOTEL i.e., NH HOTEL and Playa Hotels go up and down completely randomly.
Pair Corralation between NH HOTEL and Playa Hotels
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 1.22 times more return on investment than Playa Hotels. However, NH HOTEL is 1.22 times more volatile than Playa Hotels Resorts. It trades about 0.08 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.07 per unit of risk. If you would invest 399.00 in NH HOTEL GROUP on October 12, 2024 and sell it today you would earn a total of 223.00 from holding NH HOTEL GROUP or generate 55.89% 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. Playa Hotels Resorts
Performance |
| Timeline |
| NH HOTEL GROUP |
| Playa Hotels Resorts |
NH HOTEL and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Playa Hotels
The main advantage of trading using opposite NH HOTEL and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| NH HOTEL vs. DIVERSIFIED ROYALTY | NH HOTEL vs. Nanjing Panda Electronics | NH HOTEL vs. STORE ELECTRONIC | NH HOTEL vs. Electronic Arts |
| Playa Hotels vs. DEVRY EDUCATION GRP | Playa Hotels vs. Laureate Education | Playa Hotels vs. EVS Broadcast Equipment | Playa Hotels vs. COPLAND ROAD CAPITAL |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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