Correlation Between National Storage and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both National Storage 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 National Storage and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Choice Hotels International, you can compare the effects of market volatilities on National Storage 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 National Storage with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Choice Hotels.
Diversification Opportunities for National Storage and Choice Hotels
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Choice is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates 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 National Storage 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 National Storage Affiliates 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 National Storage i.e., National Storage and Choice Hotels go up and down completely randomly.
Pair Corralation between National Storage and Choice Hotels
Assuming the 90 days horizon National Storage is expected to generate 1.29 times less return on investment than Choice Hotels. In addition to that, National Storage is 1.39 times more volatile than Choice Hotels International. It trades about 0.18 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.32 per unit of volatility. If you would invest 12,900 in Choice Hotels International on August 30, 2024 and sell it today you would earn a total of 1,400 from holding Choice Hotels International or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Choice Hotels International
Performance |
| Timeline |
| National Storage Aff |
| Choice Hotels Intern |
National Storage and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Choice Hotels
The main advantage of trading using opposite National Storage and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage 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.| National Storage vs. CubeSmart | National Storage vs. Superior Plus Corp | National Storage vs. SIVERS SEMICONDUCTORS AB | National Storage vs. Talanx AG |
| Choice Hotels vs. FIREWEED METALS P | Choice Hotels vs. LION ONE METALS | Choice Hotels vs. PARKEN Sport Entertainment | Choice Hotels vs. ARROW ELECTRONICS |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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