Correlation Between NH HOTEL and REGIONS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and REGIONS 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 REGIONS 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 REGIONS FINANCIAL PFD, you can compare the effects of market volatilities on NH HOTEL and REGIONS 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 REGIONS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and REGIONS FINANCIAL.
Diversification Opportunities for NH HOTEL and REGIONS FINANCIAL
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NH5 and REGIONS is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and REGIONS FINANCIAL PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGIONS FINANCIAL PFD 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 REGIONS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGIONS FINANCIAL PFD has no effect on the direction of NH HOTEL i.e., NH HOTEL and REGIONS FINANCIAL go up and down completely randomly.
Pair Corralation between NH HOTEL and REGIONS FINANCIAL
Assuming the 90 days trading horizon NH HOTEL is expected to generate 7.64 times less return on investment than REGIONS FINANCIAL. But when comparing it to its historical volatility, NH HOTEL GROUP is 4.02 times less risky than REGIONS FINANCIAL. It trades about 0.05 of its potential returns per unit of risk. REGIONS FINANCIAL PFD is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,700 in REGIONS FINANCIAL PFD on October 21, 2024 and sell it today you would earn a total of 40.00 from holding REGIONS FINANCIAL PFD or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. REGIONS FINANCIAL PFD
Performance |
| Timeline |
| NH HOTEL GROUP |
| REGIONS FINANCIAL PFD |
NH HOTEL and REGIONS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and REGIONS FINANCIAL
The main advantage of trading using opposite NH HOTEL and REGIONS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, REGIONS 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 REGIONS FINANCIAL will offset losses from the drop in REGIONS FINANCIAL's long position.| NH HOTEL vs. Datang International Power | NH HOTEL vs. Cass Information Systems | NH HOTEL vs. DATATEC LTD 2 | NH HOTEL vs. Teradata Corp |
| REGIONS FINANCIAL vs. Caseys General Stores | REGIONS FINANCIAL vs. Aristocrat Leisure Limited | REGIONS FINANCIAL vs. MARKET VECTR RETAIL | REGIONS FINANCIAL vs. NorAm Drilling AS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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