Correlation Between Choice Hotels and Chegg
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Chegg 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 Chegg 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 Chegg Inc, you can compare the effects of market volatilities on Choice Hotels and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Chegg.
Diversification Opportunities for Choice Hotels and Chegg
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and Chegg is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of Choice Hotels i.e., Choice Hotels and Chegg go up and down completely randomly.
Pair Corralation between Choice Hotels and Chegg
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.34 times more return on investment than Chegg. However, Choice Hotels International is 2.92 times less risky than Chegg. It trades about 0.04 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.07 per unit of risk. If you would invest 10,772 in Choice Hotels International on September 4, 2024 and sell it today you would earn a total of 3,328 from holding Choice Hotels International or generate 30.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Choice Hotels International vs. Chegg Inc
Performance |
| Timeline |
| Choice Hotels Intern |
| Chegg Inc |
Choice Hotels and Chegg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Chegg
The main advantage of trading using opposite Choice Hotels and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Chegg 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 Chegg will offset losses from the drop in Chegg's long position.| Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. ACCOR SPADR NEW |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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