Correlation Between Choice Hotels and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Xenia 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 Choice Hotels and Xenia Hotels 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 Xenia Hotels Resorts, you can compare the effects of market volatilities on Choice Hotels and Xenia 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 Choice Hotels with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Xenia Hotels.
Diversification Opportunities for Choice Hotels and Xenia Hotels
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Choice and Xenia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Choice Hotels i.e., Choice Hotels and Xenia Hotels go up and down completely randomly.
Pair Corralation between Choice Hotels and Xenia Hotels
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.84 times more return on investment than Xenia Hotels. However, Choice Hotels International is 1.19 times less risky than Xenia Hotels. It trades about 0.27 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.11 per unit of risk. If you would invest 11,671 in Choice Hotels International on August 30, 2024 and sell it today you would earn a total of 2,629 from holding Choice Hotels International or generate 22.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Xenia Hotels Resorts
Performance |
| Timeline |
| Choice Hotels Intern |
| Xenia Hotels Resorts |
Choice Hotels and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Xenia Hotels
The main advantage of trading using opposite Choice Hotels and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Xenia 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| Choice Hotels vs. FIREWEED METALS P | Choice Hotels vs. LION ONE METALS | Choice Hotels vs. PARKEN Sport Entertainment | Choice Hotels vs. ARROW ELECTRONICS |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Summit Hotel Properties |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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