Correlation Between Choice Hotels and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and PPHE HOTEL 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 PPHE HOTEL 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 PPHE HOTEL GROUP, you can compare the effects of market volatilities on Choice Hotels and PPHE HOTEL 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 PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and PPHE HOTEL.
Diversification Opportunities for Choice Hotels and PPHE HOTEL
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Choice and PPHE is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP 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 PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Choice Hotels i.e., Choice Hotels and PPHE HOTEL go up and down completely randomly.
Pair Corralation between Choice Hotels and PPHE HOTEL
Assuming the 90 days horizon Choice Hotels is expected to generate 1.61 times less return on investment than PPHE HOTEL. In addition to that, Choice Hotels is 1.0 times more volatile than PPHE HOTEL GROUP. It trades about 0.04 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.06 per unit of volatility. If you would invest 1,147 in PPHE HOTEL GROUP on September 12, 2024 and sell it today you would earn a total of 423.00 from holding PPHE HOTEL GROUP or generate 36.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| Choice Hotels Intern |
| PPHE HOTEL GROUP |
Choice Hotels and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and PPHE HOTEL
The main advantage of trading using opposite Choice Hotels and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| Choice Hotels vs. SIEM OFFSHORE NEW | Choice Hotels vs. ULTRA CLEAN HLDGS | Choice Hotels vs. MSAD INSURANCE | Choice Hotels vs. Goosehead Insurance |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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