Correlation Between Xenia Hotels and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and Choice 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 Xenia Hotels and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and Choice Hotels International, you can compare the effects of market volatilities on Xenia Hotels and Choice 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 Xenia Hotels with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and Choice Hotels.
Diversification Opportunities for Xenia Hotels and Choice Hotels
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xenia and Choice is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Xenia Hotels 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 Xenia Hotels Resorts are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and Choice Hotels go up and down completely randomly.
Pair Corralation between Xenia Hotels and Choice Hotels
Assuming the 90 days trading horizon Xenia Hotels is expected to generate 2.88 times less return on investment than Choice Hotels. In addition to that, Xenia Hotels is 1.18 times more volatile than Choice Hotels International. It trades about 0.04 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.15 per unit of volatility. If you would invest 10,447 in Choice Hotels International on August 26, 2024 and sell it today you would earn a total of 3,653 from holding Choice Hotels International or generate 34.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. Choice Hotels International
Performance |
| Timeline |
| Xenia Hotels Resorts |
| Choice Hotels Intern |
Xenia Hotels and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and Choice Hotels
The main advantage of trading using opposite Xenia Hotels and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, Choice 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. ASHFORD HOSPITTRUST |
| Choice Hotels vs. BORR DRILLING NEW | Choice Hotels vs. Pembina Pipeline Corp | Choice Hotels vs. Gamma Communications plc | Choice Hotels vs. Comba Telecom Systems |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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