Correlation Between Choice Hotels and H-FARM SPA
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and H-FARM SPA 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 H-FARM SPA 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 H FARM SPA, you can compare the effects of market volatilities on Choice Hotels and H-FARM SPA 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 H-FARM SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and H-FARM SPA.
Diversification Opportunities for Choice Hotels and H-FARM SPA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and H-FARM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H-FARM SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Choice Hotels i.e., Choice Hotels and H-FARM SPA go up and down completely randomly.
Pair Corralation between Choice Hotels and H-FARM SPA
Assuming the 90 days horizon Choice Hotels is expected to generate 5.08 times less return on investment than H-FARM SPA. But when comparing it to its historical volatility, Choice Hotels International is 7.54 times less risky than H-FARM SPA. It trades about 0.12 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 12.00 in H FARM SPA on November 3, 2024 and sell it today you would earn a total of 1.00 from holding H FARM SPA or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. H FARM SPA
Performance |
| Timeline |
| Choice Hotels Intern |
| H FARM SPA |
Choice Hotels and H-FARM SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and H-FARM SPA
The main advantage of trading using opposite Choice Hotels and H-FARM SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, H-FARM SPA 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 H-FARM SPA will offset losses from the drop in H-FARM SPA's long position.| Choice Hotels vs. QBE Insurance Group | Choice Hotels vs. Granite Construction | Choice Hotels vs. Federal Agricultural Mortgage | Choice Hotels vs. WIMFARM SA EO |
| H-FARM SPA vs. InterContinental Hotels Group | H-FARM SPA vs. Choice Hotels International | H-FARM SPA vs. Summit Hotel Properties | H-FARM SPA vs. Pebblebrook Hotel Trust |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |