Correlation Between Choice Hotels and Melexis NV
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Melexis NV 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 Melexis NV 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 Melexis NV, you can compare the effects of market volatilities on Choice Hotels and Melexis NV 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 Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Melexis NV.
Diversification Opportunities for Choice Hotels and Melexis NV
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and Melexis is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Choice Hotels i.e., Choice Hotels and Melexis NV go up and down completely randomly.
Pair Corralation between Choice Hotels and Melexis NV
Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.57 times more return on investment than Melexis NV. However, Choice Hotels International is 1.76 times less risky than Melexis NV. It trades about 0.04 of its potential returns per unit of risk. Melexis NV is currently generating about 0.02 per unit of risk. If you would invest 11,780 in Choice Hotels International on August 30, 2024 and sell it today you would earn a total of 3,281 from holding Choice Hotels International or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Melexis NV
Performance |
| Timeline |
| Choice Hotels Intern |
| Melexis NV |
Choice Hotels and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Melexis NV
The main advantage of trading using opposite Choice Hotels and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV'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 |
| Melexis NV vs. NVIDIA | Melexis NV vs. Intel | Melexis NV vs. Taiwan Semiconductor Manufacturing | Melexis NV vs. Marvell Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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