Correlation Between Choice Hotels and ROHM
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and ROHM 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 ROHM 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 ROHM Co, you can compare the effects of market volatilities on Choice Hotels and ROHM 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 ROHM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and ROHM.
Diversification Opportunities for Choice Hotels and ROHM
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and ROHM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and ROHM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM 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 ROHM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM has no effect on the direction of Choice Hotels i.e., Choice Hotels and ROHM go up and down completely randomly.
Pair Corralation between Choice Hotels and ROHM
Considering the 90-day investment horizon Choice Hotels International is expected to generate 2.82 times more return on investment than ROHM. However, Choice Hotels is 2.82 times more volatile than ROHM Co. It trades about 0.36 of its potential returns per unit of risk. ROHM Co is currently generating about -0.22 per unit of risk. If you would invest 13,951 in Choice Hotels International on September 1, 2024 and sell it today you would earn a total of 1,173 from holding Choice Hotels International or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. ROHM Co
Performance |
| Timeline |
| Choice Hotels Intern |
| ROHM |
Choice Hotels and ROHM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and ROHM
The main advantage of trading using opposite Choice Hotels and ROHM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, ROHM 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 ROHM will offset losses from the drop in ROHM'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 |
| ROHM vs. ON Semiconductor | ROHM vs. Monolithic Power Systems | ROHM vs. Navitas Semiconductor Corp | ROHM vs. Globalfoundries |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |