Correlation Between NH Hoteles and Aena SA
Can any of the company-specific risk be diversified away by investing in both NH Hoteles and Aena SA 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 Hoteles and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Hoteles and Aena SA, you can compare the effects of market volatilities on NH Hoteles and Aena SA 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 Hoteles with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Aena SA.
Diversification Opportunities for NH Hoteles and Aena SA
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NHH and Aena is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and NH Hoteles 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 Hoteles are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of NH Hoteles i.e., NH Hoteles and Aena SA go up and down completely randomly.
Pair Corralation between NH Hoteles and Aena SA
Assuming the 90 days trading horizon NH Hoteles is expected to generate 1.63 times more return on investment than Aena SA. However, NH Hoteles is 1.63 times more volatile than Aena SA. It trades about 0.06 of its potential returns per unit of risk. Aena SA is currently generating about -0.13 per unit of risk. If you would invest 426.00 in NH Hoteles on August 29, 2024 and sell it today you would earn a total of 7.00 from holding NH Hoteles or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Hoteles vs. Aena SA
Performance |
| Timeline |
| NH Hoteles |
| Aena SA |
NH Hoteles and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Hoteles and Aena SA
The main advantage of trading using opposite NH Hoteles and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hoteles position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| NH Hoteles vs. Melia Hotels | NH Hoteles vs. Indra A | NH Hoteles vs. Fomento de Construcciones | NH Hoteles vs. Acerinox |
| Aena SA vs. Azaria Rental SOCIMI | Aena SA vs. Technomeca Aerospace SA | Aena SA vs. Borges Agricultural Industrial | Aena SA vs. Ebro Foods |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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