Correlation Between Choice Hotels and Polymeric Resources
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Polymeric Resources 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 Polymeric Resources 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 Polymeric Resources, you can compare the effects of market volatilities on Choice Hotels and Polymeric Resources 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 Polymeric Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Polymeric Resources.
Diversification Opportunities for Choice Hotels and Polymeric Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and Polymeric is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Polymeric Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polymeric Resources 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 Polymeric Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polymeric Resources has no effect on the direction of Choice Hotels i.e., Choice Hotels and Polymeric Resources go up and down completely randomly.
Pair Corralation between Choice Hotels and Polymeric Resources
Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.38 times more return on investment than Polymeric Resources. However, Choice Hotels International is 2.64 times less risky than Polymeric Resources. It trades about 0.16 of its potential returns per unit of risk. Polymeric Resources is currently generating about -0.09 per unit of risk. If you would invest 11,340 in Choice Hotels International on September 1, 2024 and sell it today you would earn a total of 3,784 from holding Choice Hotels International or generate 33.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Choice Hotels International vs. Polymeric Resources
Performance |
| Timeline |
| Choice Hotels Intern |
| Polymeric Resources |
Choice Hotels and Polymeric Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Polymeric Resources
The main advantage of trading using opposite Choice Hotels and Polymeric Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Polymeric Resources 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 Polymeric Resources will offset losses from the drop in Polymeric Resources' long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott International |
| Polymeric Resources vs. BASF SE NA | Polymeric Resources vs. Braskem SA Class | Polymeric Resources vs. Lsb Industries | Polymeric Resources vs. Dow Inc |
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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