Correlation Between Australian Agricultural and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural 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 Australian Agricultural and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Choice Hotels International, you can compare the effects of market volatilities on Australian Agricultural 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 Australian Agricultural with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Choice Hotels.
Diversification Opportunities for Australian Agricultural and Choice Hotels
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Choice is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural i.e., Australian Agricultural and Choice Hotels go up and down completely randomly.
Pair Corralation between Australian Agricultural and Choice Hotels
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the Choice Hotels. In addition to that, Australian Agricultural is 1.36 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 0.29 per unit of volatility. If you would invest 12,800 in Choice Hotels International on August 31, 2024 and sell it today you would earn a total of 1,300 from holding Choice Hotels International or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Choice Hotels International
Performance |
| Timeline |
| Australian Agricultural |
| Choice Hotels Intern |
Australian Agricultural and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Choice Hotels
The main advantage of trading using opposite Australian Agricultural and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural 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.| Australian Agricultural vs. SalMar ASA | Australian Agricultural vs. Superior Plus Corp | Australian Agricultural vs. NMI Holdings | Australian Agricultural vs. Origin Agritech |
| Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. ACCOR SPADR NEW |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |