Correlation Between Choice Hotels and Klöckner
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Klöckner 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 Klöckner 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 Klckner Co SE, you can compare the effects of market volatilities on Choice Hotels and Klöckner 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 Klöckner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Klöckner.
Diversification Opportunities for Choice Hotels and Klöckner
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and Klöckner is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE 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 Klöckner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of Choice Hotels i.e., Choice Hotels and Klöckner go up and down completely randomly.
Pair Corralation between Choice Hotels and Klöckner
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.89 times more return on investment than Klöckner. However, Choice Hotels International is 1.12 times less risky than Klöckner. It trades about 0.04 of its potential returns per unit of risk. Klckner Co SE is currently generating about -0.05 per unit of risk. If you would invest 10,870 in Choice Hotels International on September 3, 2024 and sell it today you would earn a total of 3,230 from holding Choice Hotels International or generate 29.71% 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. Klckner Co SE
Performance |
| Timeline |
| Choice Hotels Intern |
| Klckner Co SE |
Choice Hotels and Klöckner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Klöckner
The main advantage of trading using opposite Choice Hotels and Klöckner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Klöckner 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 Klöckner will offset losses from the drop in Klöckner's long position.| Choice Hotels vs. Check Point Software | Choice Hotels vs. AXWAY SOFTWARE EO | Choice Hotels vs. ECHO INVESTMENT ZY | Choice Hotels vs. Take Two Interactive Software |
| Klöckner vs. MCEWEN MINING INC | Klöckner vs. GRUPO CARSO A1 | Klöckner vs. HYATT HOTELS A | Klöckner vs. Choice Hotels International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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