Correlation Between Choice Hotels and GRENKELEASING Dusseldorf
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf, you can compare the effects of market volatilities on Choice Hotels and GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and GRENKELEASING Dusseldorf.
Diversification Opportunities for Choice Hotels and GRENKELEASING Dusseldorf
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and GRENKELEASING is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and GRENKELEASING Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRENKELEASING Dusseldorf has no effect on the direction of Choice Hotels i.e., Choice Hotels and GRENKELEASING Dusseldorf go up and down completely randomly.
Pair Corralation between Choice Hotels and GRENKELEASING Dusseldorf
Assuming the 90 days horizon Choice Hotels is expected to generate 1.86 times less return on investment than GRENKELEASING Dusseldorf. But when comparing it to its historical volatility, Choice Hotels International is 1.29 times less risky than GRENKELEASING Dusseldorf. It trades about 0.13 of its potential returns per unit of risk. GRENKELEASING Dusseldorf is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,592 in GRENKELEASING Dusseldorf on November 2, 2024 and sell it today you would earn a total of 112.00 from holding GRENKELEASING Dusseldorf or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. GRENKELEASING Dusseldorf
Performance |
| Timeline |
| Choice Hotels Intern |
| GRENKELEASING Dusseldorf |
Choice Hotels and GRENKELEASING Dusseldorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and GRENKELEASING Dusseldorf
The main advantage of trading using opposite Choice Hotels and GRENKELEASING Dusseldorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, GRENKELEASING Dusseldorf 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 GRENKELEASING Dusseldorf will offset losses from the drop in GRENKELEASING Dusseldorf's long position.| Choice Hotels vs. PULSION Medical Systems | Choice Hotels vs. Merit Medical Systems | Choice Hotels vs. Live Nation Entertainment | Choice Hotels vs. Compugroup Medical SE |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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