Correlation Between BBB Foods and NH Hotel
Can any of the company-specific risk be diversified away by investing in both BBB Foods and NH Hotel 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 BBB Foods and NH Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and NH Hotel Group, you can compare the effects of market volatilities on BBB Foods and NH Hotel 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 BBB Foods with a short position of NH Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and NH Hotel.
Diversification Opportunities for BBB Foods and NH Hotel
Excellent diversification
The 3 months correlation between BBB and NHHEF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and NH Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Hotel Group and BBB Foods 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 BBB Foods are associated (or correlated) with NH Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Hotel Group has no effect on the direction of BBB Foods i.e., BBB Foods and NH Hotel go up and down completely randomly.
Pair Corralation between BBB Foods and NH Hotel
Given the investment horizon of 90 days BBB Foods is expected to generate 9.72 times less return on investment than NH Hotel. But when comparing it to its historical volatility, BBB Foods is 3.59 times less risky than NH Hotel. It trades about 0.08 of its potential returns per unit of risk. NH Hotel Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 390.00 in NH Hotel Group on October 11, 2024 and sell it today you would earn a total of 150.00 from holding NH Hotel Group or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. NH Hotel Group
Performance |
| Timeline |
| BBB Foods |
| NH Hotel Group |
BBB Foods and NH Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and NH Hotel
The main advantage of trading using opposite BBB Foods and NH Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, NH Hotel 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 NH Hotel will offset losses from the drop in NH Hotel's long position.| BBB Foods vs. Enel Chile SA | BBB Foods vs. Glorywin Entertainment Group | BBB Foods vs. Canlan Ice Sports | BBB Foods vs. Cheniere Energy Partners |
| NH Hotel vs. MYT Netherlands Parent | NH Hotel vs. LB Foster | NH Hotel vs. BBB Foods | NH Hotel vs. The Gap, |
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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