Correlation Between Choice Hotels and Broadwind
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Broadwind 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 Broadwind 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 Broadwind, you can compare the effects of market volatilities on Choice Hotels and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Broadwind.
Diversification Opportunities for Choice Hotels and Broadwind
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and Broadwind is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Choice Hotels i.e., Choice Hotels and Broadwind go up and down completely randomly.
Pair Corralation between Choice Hotels and Broadwind
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.35 times more return on investment than Broadwind. However, Choice Hotels International is 2.86 times less risky than Broadwind. It trades about 0.12 of its potential returns per unit of risk. Broadwind is currently generating about 0.0 per unit of risk. If you would invest 12,074 in Choice Hotels International on October 14, 2024 and sell it today you would earn a total of 1,426 from holding Choice Hotels International or generate 11.81% 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. Broadwind
Performance |
| Timeline |
| Choice Hotels Intern |
| Broadwind |
Choice Hotels and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Broadwind
The main advantage of trading using opposite Choice Hotels and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Choice Hotels vs. Pure Storage | Choice Hotels vs. Coor Service Management | Choice Hotels vs. Teradata Corp | Choice Hotels vs. NTT DATA |
| Broadwind vs. DETALION GAMES SA | Broadwind vs. Sunstone Hotel Investors | Broadwind vs. Choice Hotels International | Broadwind vs. The Hongkong and |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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