Correlation Between Check Point and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Check Point and Choice Hotels 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 Check Point and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Choice Hotels International, you can compare the effects of market volatilities on Check Point and Choice Hotels 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 Check Point with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Choice Hotels.
Diversification Opportunities for Check Point and Choice Hotels
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and Choice is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Check Point 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 Check Point Software are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Check Point i.e., Check Point and Choice Hotels go up and down completely randomly.
Pair Corralation between Check Point and Choice Hotels
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.45 times more return on investment than Choice Hotels. However, Check Point is 1.45 times more volatile than Choice Hotels International. It trades about 0.31 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.12 per unit of risk. If you would invest 18,115 in Check Point Software on November 3, 2024 and sell it today you would earn a total of 2,745 from holding Check Point Software or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Choice Hotels International
Performance |
| Timeline |
| Check Point Software |
| Choice Hotels Intern |
Check Point and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Choice Hotels
The main advantage of trading using opposite Check Point and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| Choice Hotels vs. QBE Insurance Group | Choice Hotels vs. Granite Construction | Choice Hotels vs. Federal Agricultural Mortgage | Choice Hotels vs. WIMFARM SA EO |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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