Correlation Between Choice Hotels and DALATA HOTEL
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and DALATA HOTEL 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 DALATA HOTEL 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 DALATA HOTEL, you can compare the effects of market volatilities on Choice Hotels and DALATA HOTEL 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 DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and DALATA HOTEL.
Diversification Opportunities for Choice Hotels and DALATA HOTEL
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Choice and DALATA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of Choice Hotels i.e., Choice Hotels and DALATA HOTEL go up and down completely randomly.
Pair Corralation between Choice Hotels and DALATA HOTEL
Assuming the 90 days horizon Choice Hotels is expected to generate 1.59 times less return on investment than DALATA HOTEL. But when comparing it to its historical volatility, Choice Hotels International is 1.64 times less risky than DALATA HOTEL. It trades about 0.08 of its potential returns per unit of risk. DALATA HOTEL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 424.00 in DALATA HOTEL on November 6, 2024 and sell it today you would earn a total of 14.00 from holding DALATA HOTEL or generate 3.3% 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. DALATA HOTEL
Performance |
| Timeline |
| Choice Hotels Intern |
| DALATA HOTEL |
Choice Hotels and DALATA HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and DALATA HOTEL
The main advantage of trading using opposite Choice Hotels and DALATA HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, DALATA HOTEL 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 DALATA HOTEL will offset losses from the drop in DALATA HOTEL's long position.| Choice Hotels vs. Align Technology | Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. Gaztransport Technigaz SA | Choice Hotels vs. Television Broadcasts Limited |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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