Correlation Between NH Hoteles and Media Investment
Can any of the company-specific risk be diversified away by investing in both NH Hoteles and Media Investment 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 Media Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Hoteles and Media Investment Optimization, you can compare the effects of market volatilities on NH Hoteles and Media Investment 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 Media Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Media Investment.
Diversification Opportunities for NH Hoteles and Media Investment
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NHH and Media is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Media Investment Optimization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Investment Opt 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 Media Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Investment Opt has no effect on the direction of NH Hoteles i.e., NH Hoteles and Media Investment go up and down completely randomly.
Pair Corralation between NH Hoteles and Media Investment
Assuming the 90 days trading horizon NH Hoteles is expected to generate 1.58 times less return on investment than Media Investment. But when comparing it to its historical volatility, NH Hoteles is 3.55 times less risky than Media Investment. It trades about 0.22 of its potential returns per unit of risk. Media Investment Optimization is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 268.00 in Media Investment Optimization on November 5, 2024 and sell it today you would earn a total of 2.00 from holding Media Investment Optimization or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Hoteles vs. Media Investment Optimization
Performance |
| Timeline |
| NH Hoteles |
| Media Investment Opt |
NH Hoteles and Media Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Hoteles and Media Investment
The main advantage of trading using opposite NH Hoteles and Media Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hoteles position performs unexpectedly, Media Investment 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 Media Investment will offset losses from the drop in Media Investment's long position.| NH Hoteles vs. Melia Hotels | NH Hoteles vs. Indra A | NH Hoteles vs. Fomento de Construcciones | NH Hoteles vs. Acerinox |
| Media Investment vs. Techo Hogar SOCIMI, | Media Investment vs. Arteche Lantegi Elkartea | Media Investment vs. Ebro Foods | Media Investment vs. Hispanotels Inversiones SOCIMI |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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