Correlation Between Choice Hotels and Intergroup
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Intergroup 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 Intergroup 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 The Intergroup, you can compare the effects of market volatilities on Choice Hotels and Intergroup 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 Intergroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Intergroup.
Diversification Opportunities for Choice Hotels and Intergroup
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and Intergroup is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup 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 Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of Choice Hotels i.e., Choice Hotels and Intergroup go up and down completely randomly.
Pair Corralation between Choice Hotels and Intergroup
Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.53 times more return on investment than Intergroup. However, Choice Hotels International is 1.89 times less risky than Intergroup. It trades about 0.19 of its potential returns per unit of risk. The Intergroup is currently generating about -0.11 per unit of risk. If you would invest 12,612 in Choice Hotels International on August 31, 2024 and sell it today you would earn a total of 2,449 from holding Choice Hotels International or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Choice Hotels International vs. The Intergroup
Performance |
| Timeline |
| Choice Hotels Intern |
| Intergroup |
Choice Hotels and Intergroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Intergroup
The main advantage of trading using opposite Choice Hotels and Intergroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Intergroup 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 Intergroup will offset losses from the drop in Intergroup'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 |
| Intergroup vs. Huazhu Group | Intergroup vs. Atour Lifestyle Holdings | Intergroup vs. LuxUrban Hotels | Intergroup vs. InterContinental Hotels Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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