Correlation Between Choice Hotels and Gaztransport Technigaz
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Gaztransport Technigaz 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 Gaztransport Technigaz 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 Gaztransport Technigaz SA, you can compare the effects of market volatilities on Choice Hotels and Gaztransport Technigaz 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 Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Gaztransport Technigaz.
Diversification Opportunities for Choice Hotels and Gaztransport Technigaz
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and Gaztransport is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz 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 Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of Choice Hotels i.e., Choice Hotels and Gaztransport Technigaz go up and down completely randomly.
Pair Corralation between Choice Hotels and Gaztransport Technigaz
Assuming the 90 days horizon Choice Hotels is expected to generate 2.34 times less return on investment than Gaztransport Technigaz. But when comparing it to its historical volatility, Choice Hotels International is 1.52 times less risky than Gaztransport Technigaz. It trades about 0.11 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 12,950 in Gaztransport Technigaz SA on October 11, 2024 and sell it today you would earn a total of 760.00 from holding Gaztransport Technigaz SA or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Gaztransport Technigaz SA
Performance |
| Timeline |
| Choice Hotels Intern |
| Gaztransport Technigaz |
Choice Hotels and Gaztransport Technigaz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Gaztransport Technigaz
The main advantage of trading using opposite Choice Hotels and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Gaztransport Technigaz 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 Gaztransport Technigaz will offset losses from the drop in Gaztransport Technigaz's long position.| Choice Hotels vs. SEI INVESTMENTS | Choice Hotels vs. Japan Asia Investment | Choice Hotels vs. Apollo Investment Corp | Choice Hotels vs. SLR Investment Corp |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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