Correlation Between Choice Hotels and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and AM EAGLE 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 AM EAGLE 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 AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Choice Hotels and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and AM EAGLE.
Diversification Opportunities for Choice Hotels and AM EAGLE
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and AFG is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Choice Hotels i.e., Choice Hotels and AM EAGLE go up and down completely randomly.
Pair Corralation between Choice Hotels and AM EAGLE
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.55 times more return on investment than AM EAGLE. However, Choice Hotels International is 1.83 times less risky than AM EAGLE. It trades about 0.32 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 per unit of risk. If you would invest 12,700 in Choice Hotels International on September 2, 2024 and sell it today you would earn a total of 1,400 from holding Choice Hotels International or generate 11.02% 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. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Choice Hotels Intern |
| AM EAGLE OUTFITTERS |
Choice Hotels and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and AM EAGLE
The main advantage of trading using opposite Choice Hotels and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE'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 |
| AM EAGLE vs. SIVERS SEMICONDUCTORS AB | AM EAGLE vs. Darden Restaurants | AM EAGLE vs. Reliance Steel Aluminum | AM EAGLE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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