Correlation Between Choice Hotels and TITAN MACHINERY
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and TITAN MACHINERY 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 TITAN MACHINERY 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 TITAN MACHINERY, you can compare the effects of market volatilities on Choice Hotels and TITAN MACHINERY 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 TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and TITAN MACHINERY.
Diversification Opportunities for Choice Hotels and TITAN MACHINERY
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Choice and TITAN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of Choice Hotels i.e., Choice Hotels and TITAN MACHINERY go up and down completely randomly.
Pair Corralation between Choice Hotels and TITAN MACHINERY
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.53 times more return on investment than TITAN MACHINERY. However, Choice Hotels International is 1.87 times less risky than TITAN MACHINERY. It trades about 0.04 of its potential returns per unit of risk. TITAN MACHINERY is currently generating about -0.04 per unit of risk. If you would invest 10,968 in Choice Hotels International on September 2, 2024 and sell it today you would earn a total of 3,132 from holding Choice Hotels International or generate 28.56% 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. TITAN MACHINERY
Performance |
| Timeline |
| Choice Hotels Intern |
| TITAN MACHINERY |
Choice Hotels and TITAN MACHINERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and TITAN MACHINERY
The main advantage of trading using opposite Choice Hotels and TITAN MACHINERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, TITAN MACHINERY 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 TITAN MACHINERY will offset losses from the drop in TITAN MACHINERY's long position.| Choice Hotels vs. Coeur Mining | Choice Hotels vs. MINCO SILVER | Choice Hotels vs. FORMPIPE SOFTWARE AB | Choice Hotels vs. Calibre Mining Corp |
| TITAN MACHINERY vs. SIVERS SEMICONDUCTORS AB | TITAN MACHINERY vs. Darden Restaurants | TITAN MACHINERY vs. Reliance Steel Aluminum | TITAN MACHINERY vs. Q2M Managementberatung AG |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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