Correlation Between Iridium Communications and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Choice Hotels International, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Choice Hotels.
Diversification Opportunities for Iridium Communications and Choice Hotels
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iridium and Choice is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications 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 Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and Choice Hotels go up and down completely randomly.
Pair Corralation between Iridium Communications and Choice Hotels
Assuming the 90 days horizon Iridium Communications is expected to generate 1.28 times more return on investment than Choice Hotels. However, Iridium Communications is 1.28 times more volatile than Choice Hotels International. It trades about 0.0 of its potential returns per unit of risk. Choice Hotels International is currently generating about -0.04 per unit of risk. If you would invest 2,809 in Iridium Communications on October 26, 2024 and sell it today you would lose (17.00) from holding Iridium Communications or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Choice Hotels International
Performance |
| Timeline |
| Iridium Communications |
| Choice Hotels Intern |
Iridium Communications and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Choice Hotels
The main advantage of trading using opposite Iridium Communications and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. CENTURIA OFFICE REIT | Iridium Communications vs. Magnachip Semiconductor | Iridium Communications vs. Autohome ADR | Iridium Communications vs. Hua Hong Semiconductor |
| Choice Hotels vs. Chengdu PUTIAN Telecommunications | Choice Hotels vs. Iridium Communications | Choice Hotels vs. THAI BEVERAGE | Choice Hotels vs. Zoom Video Communications |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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