Correlation Between Choice Hotels and Apple
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Choice Hotels and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Apple.
Diversification Opportunities for Choice Hotels and Apple
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Choice and Apple is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Choice Hotels i.e., Choice Hotels and Apple go up and down completely randomly.
Pair Corralation between Choice Hotels and Apple
Assuming the 90 days horizon Choice Hotels is expected to generate 76.58 times less return on investment than Apple. In addition to that, Choice Hotels is 1.41 times more volatile than Apple Inc. It trades about 0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.63 per unit of volatility. If you would invest 21,220 in Apple Inc on September 13, 2024 and sell it today you would earn a total of 2,670 from holding Apple Inc or generate 12.58% 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. Apple Inc
Performance |
| Timeline |
| Choice Hotels Intern |
| Apple Inc |
Choice Hotels and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Apple
The main advantage of trading using opposite Choice Hotels and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. INTERCONT HOTELS | Choice Hotels vs. Wyndham Hotels Resorts |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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