Correlation Between Choice Hotels and Salesforce
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Salesforce 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 Salesforce 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 Salesforce, you can compare the effects of market volatilities on Choice Hotels and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Salesforce.
Diversification Opportunities for Choice Hotels and Salesforce
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and Salesforce is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Choice Hotels i.e., Choice Hotels and Salesforce go up and down completely randomly.
Pair Corralation between Choice Hotels and Salesforce
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.87 times more return on investment than Salesforce. However, Choice Hotels International is 1.15 times less risky than Salesforce. It trades about 0.07 of its potential returns per unit of risk. Salesforce is currently generating about -0.13 per unit of risk. If you would invest 13,272 in Choice Hotels International on November 30, 2024 and sell it today you would earn a total of 528.00 from holding Choice Hotels International or generate 3.98% 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. Salesforce
Performance |
| Timeline |
| Choice Hotels Intern |
| Salesforce |
Choice Hotels and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Salesforce
The main advantage of trading using opposite Choice Hotels and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| Choice Hotels vs. KENEDIX OFFICE INV | Choice Hotels vs. Compugroup Medical SE | Choice Hotels vs. Inspire Medical Systems | Choice Hotels vs. CREO MEDICAL GRP |
| Salesforce vs. GUILD ESPORTS PLC | Salesforce vs. DICKS Sporting Goods | Salesforce vs. MUTUIONLINE | Salesforce vs. PACIFIC ONLINE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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