Correlation Between MSAD INSURANCE and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE 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 MSAD INSURANCE and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSAD INSURANCE and Choice Hotels International, you can compare the effects of market volatilities on MSAD INSURANCE 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 MSAD INSURANCE with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and Choice Hotels.
Diversification Opportunities for MSAD INSURANCE and Choice Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSAD and Choice is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE i.e., MSAD INSURANCE and Choice Hotels go up and down completely randomly.
Pair Corralation between MSAD INSURANCE and Choice Hotels
Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 1.19 times more return on investment than Choice Hotels. However, MSAD INSURANCE is 1.19 times more volatile than Choice Hotels International. It trades about 0.11 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.05 per unit of risk. If you would invest 1,093 in MSAD INSURANCE on September 12, 2024 and sell it today you would earn a total of 1,067 from holding MSAD INSURANCE or generate 97.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSAD INSURANCE vs. Choice Hotels International
Performance |
| Timeline |
| MSAD INSURANCE |
| Choice Hotels Intern |
MSAD INSURANCE and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSAD INSURANCE and Choice Hotels
The main advantage of trading using opposite MSAD INSURANCE and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD INSURANCE 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.| MSAD INSURANCE vs. Apple Inc | MSAD INSURANCE vs. Apple Inc | MSAD INSURANCE vs. Apple Inc | MSAD INSURANCE vs. Apple Inc |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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