Correlation Between Choice Hotels and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Adtalem Global 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 Adtalem Global 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 Adtalem Global Education, you can compare the effects of market volatilities on Choice Hotels and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Adtalem Global.
Diversification Opportunities for Choice Hotels and Adtalem Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Choice and Adtalem is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Choice Hotels i.e., Choice Hotels and Adtalem Global go up and down completely randomly.
Pair Corralation between Choice Hotels and Adtalem Global
Assuming the 90 days horizon Choice Hotels is expected to generate 2.78 times less return on investment than Adtalem Global. But when comparing it to its historical volatility, Choice Hotels International is 1.5 times less risky than Adtalem Global. It trades about 0.06 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,100 in Adtalem Global Education on October 16, 2024 and sell it today you would earn a total of 5,050 from holding Adtalem Global Education or generate 123.17% 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. Adtalem Global Education
Performance |
| Timeline |
| Choice Hotels Intern |
| Adtalem Global Education |
Choice Hotels and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Adtalem Global
The main advantage of trading using opposite Choice Hotels and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| Choice Hotels vs. T MOBILE INCDL 00001 | Choice Hotels vs. Shenandoah Telecommunications | Choice Hotels vs. ecotel communication ag | Choice Hotels vs. Cairo Communication SpA |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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