Correlation Between Choice Hotels and Kubota
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Kubota 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 Kubota 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 Kubota, you can compare the effects of market volatilities on Choice Hotels and Kubota 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 Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Kubota.
Diversification Opportunities for Choice Hotels and Kubota
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and Kubota is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota 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 Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of Choice Hotels i.e., Choice Hotels and Kubota go up and down completely randomly.
Pair Corralation between Choice Hotels and Kubota
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.26 times more return on investment than Kubota. However, Choice Hotels is 1.26 times more volatile than Kubota. It trades about 0.14 of its potential returns per unit of risk. Kubota is currently generating about -0.17 per unit of risk. If you would invest 12,100 in Choice Hotels International on September 13, 2024 and sell it today you would earn a total of 1,300 from holding Choice Hotels International or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Kubota
Performance |
| Timeline |
| Choice Hotels Intern |
| Kubota |
Choice Hotels and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Kubota
The main advantage of trading using opposite Choice Hotels and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. INTERCONT HOTELS | Choice Hotels vs. Wyndham Hotels Resorts |
| Kubota vs. SPORTING | Kubota vs. MELIA HOTELS | Kubota vs. Pebblebrook Hotel Trust | Kubota 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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