Correlation Between NH HOTEL and TFS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL, you can compare the effects of market volatilities on NH HOTEL and TFS FINANCIAL 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and TFS FINANCIAL.
Diversification Opportunities for NH HOTEL and TFS FINANCIAL
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NH5 and TFS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of NH HOTEL i.e., NH HOTEL and TFS FINANCIAL go up and down completely randomly.
Pair Corralation between NH HOTEL and TFS FINANCIAL
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 2.02 times more return on investment than TFS FINANCIAL. However, NH HOTEL is 2.02 times more volatile than TFS FINANCIAL. It trades about 0.05 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.04 per unit of risk. If you would invest 361.00 in NH HOTEL GROUP on December 4, 2024 and sell it today you would earn a total of 267.00 from holding NH HOTEL GROUP or generate 73.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NH HOTEL GROUP vs. TFS FINANCIAL
Performance |
| Timeline |
| NH HOTEL GROUP |
| TFS FINANCIAL |
NH HOTEL and TFS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and TFS FINANCIAL
The main advantage of trading using opposite NH HOTEL and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, TFS FINANCIAL 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 TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL's long position.| NH HOTEL vs. Renesas Electronics | NH HOTEL vs. Electronic Arts | NH HOTEL vs. Methode Electronics | NH HOTEL vs. COSTCO WHOLESALE CDR |
| TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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