Correlation Between Choice Hotels and Ferrovial
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Ferrovial 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 Choice Hotels and Ferrovial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and Ferrovial SA, you can compare the effects of market volatilities on Choice Hotels and Ferrovial 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 Choice Hotels with a short position of Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Ferrovial.
Diversification Opportunities for Choice Hotels and Ferrovial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and Ferrovial is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA and Choice 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 Choice Hotels International are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Choice Hotels i.e., Choice Hotels and Ferrovial go up and down completely randomly.
Pair Corralation between Choice Hotels and Ferrovial
Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.48 times more return on investment than Ferrovial. However, Choice Hotels International is 2.08 times less risky than Ferrovial. It trades about 0.03 of its potential returns per unit of risk. Ferrovial SA is currently generating about -0.01 per unit of risk. If you would invest 12,795 in Choice Hotels International on August 30, 2024 and sell it today you would earn a total of 2,266 from holding Choice Hotels International or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.45% |
| Values | Daily Returns |
Choice Hotels International vs. Ferrovial SA
Performance |
| Timeline |
| Choice Hotels Intern |
| Ferrovial SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Choice Hotels and Ferrovial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Ferrovial
The main advantage of trading using opposite Choice Hotels and Ferrovial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Ferrovial 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 Ferrovial will offset losses from the drop in Ferrovial's long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott International |
| Ferrovial vs. Vinci SA ADR | Ferrovial vs. Geberit AG ADR | Ferrovial vs. Kone Oyj ADR | Ferrovial vs. Kuehne Nagel International |
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.
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