Correlation Between NORWEGIAN AIR and Host Hotels
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Host Hotels 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 NORWEGIAN AIR and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Host Hotels Resorts, you can compare the effects of market volatilities on NORWEGIAN AIR and Host Hotels 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 NORWEGIAN AIR with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Host Hotels.
Diversification Opportunities for NORWEGIAN AIR and Host Hotels
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and Host is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Host Hotels go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Host Hotels
Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 3.57 times less return on investment than Host Hotels. In addition to that, NORWEGIAN AIR is 1.89 times more volatile than Host Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.04 per unit of volatility. If you would invest 1,457 in Host Hotels Resorts on September 19, 2024 and sell it today you would earn a total of 293.00 from holding Host Hotels Resorts or generate 20.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Host Hotels Resorts
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Host Hotels Resorts |
NORWEGIAN AIR and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Host Hotels
The main advantage of trading using opposite NORWEGIAN AIR and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| NORWEGIAN AIR vs. INDOFOOD AGRI RES | NORWEGIAN AIR vs. Astral Foods Limited | NORWEGIAN AIR vs. Cardinal Health | NORWEGIAN AIR vs. Performance Food Group |
| Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Xenia Hotels Resorts | Host Hotels vs. Summit Hotel Properties | Host Hotels vs. ASHFORD HOSPITTRUST |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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