Correlation Between NH Hoteles and Izertis Sa
Can any of the company-specific risk be diversified away by investing in both NH Hoteles and Izertis 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 Izertis 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 Izertis Sa, you can compare the effects of market volatilities on NH Hoteles and Izertis 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 Izertis Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Izertis Sa.
Diversification Opportunities for NH Hoteles and Izertis Sa
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NHH and Izertis is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Izertis Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izertis 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 Izertis Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izertis Sa has no effect on the direction of NH Hoteles i.e., NH Hoteles and Izertis Sa go up and down completely randomly.
Pair Corralation between NH Hoteles and Izertis Sa
Assuming the 90 days trading horizon NH Hoteles is expected to generate 2.75 times more return on investment than Izertis Sa. However, NH Hoteles is 2.75 times more volatile than Izertis Sa. It trades about 0.1 of its potential returns per unit of risk. Izertis Sa is currently generating about -0.16 per unit of risk. If you would invest 425.00 in NH Hoteles on September 2, 2024 and sell it today you would earn a total of 14.00 from holding NH Hoteles or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Hoteles vs. Izertis Sa
Performance |
| Timeline |
| NH Hoteles |
| Izertis Sa |
NH Hoteles and Izertis Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Hoteles and Izertis Sa
The main advantage of trading using opposite NH Hoteles and Izertis Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hoteles position performs unexpectedly, Izertis 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 Izertis Sa will offset losses from the drop in Izertis Sa's long position.| NH Hoteles vs. International Consolidated Airlines | NH Hoteles vs. Merlin Properties SOCIMI | NH Hoteles vs. Aena SA | NH Hoteles vs. Acerinox |
| Izertis Sa vs. Arteche Lantegi Elkartea | Izertis Sa vs. NH Hoteles | Izertis Sa vs. Naturhouse Health SA | Izertis Sa vs. Tier1 Technology SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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