Correlation Between Elaia Investment and NH Hoteles
Can any of the company-specific risk be diversified away by investing in both Elaia Investment and NH Hoteles 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 Elaia Investment and NH Hoteles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elaia Investment Spain and NH Hoteles, you can compare the effects of market volatilities on Elaia Investment and NH Hoteles 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 Elaia Investment with a short position of NH Hoteles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elaia Investment and NH Hoteles.
Diversification Opportunities for Elaia Investment and NH Hoteles
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elaia and NHH is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Elaia Investment Spain and NH Hoteles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Hoteles and Elaia Investment 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 Elaia Investment Spain are associated (or correlated) with NH Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Hoteles has no effect on the direction of Elaia Investment i.e., Elaia Investment and NH Hoteles go up and down completely randomly.
Pair Corralation between Elaia Investment and NH Hoteles
Assuming the 90 days trading horizon Elaia Investment Spain is expected to under-perform the NH Hoteles. In addition to that, Elaia Investment is 3.37 times more volatile than NH Hoteles. It trades about -0.22 of its total potential returns per unit of risk. NH Hoteles is currently generating about -0.03 per unit of volatility. If you would invest 426.00 in NH Hoteles on August 27, 2024 and sell it today you would lose (5.00) from holding NH Hoteles or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elaia Investment Spain vs. NH Hoteles
Performance |
| Timeline |
| Elaia Investment Spain |
| NH Hoteles |
Elaia Investment and NH Hoteles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elaia Investment and NH Hoteles
The main advantage of trading using opposite Elaia Investment and NH Hoteles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elaia Investment position performs unexpectedly, NH Hoteles 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 Hoteles will offset losses from the drop in NH Hoteles' long position.The idea behind Elaia Investment Spain and NH Hoteles pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NH Hoteles vs. Melia Hotels | NH Hoteles vs. Indra A | NH Hoteles vs. Fomento de Construcciones | NH Hoteles vs. Acerinox |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| CEOs Directory Screen CEOs from public companies around the world |