Correlation Between Choice Hotels and Marks
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Marks 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 Marks 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 Marks and Spencer, you can compare the effects of market volatilities on Choice Hotels and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Marks.
Diversification Opportunities for Choice Hotels and Marks
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and Marks is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Choice Hotels i.e., Choice Hotels and Marks go up and down completely randomly.
Pair Corralation between Choice Hotels and Marks
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.01 times more return on investment than Marks. However, Choice Hotels is 1.01 times more volatile than Marks and Spencer. It trades about 0.11 of its potential returns per unit of risk. Marks and Spencer is currently generating about -0.1 per unit of risk. If you would invest 13,371 in Choice Hotels International on October 11, 2024 and sell it today you would earn a total of 329.00 from holding Choice Hotels International or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Marks and Spencer
Performance |
| Timeline |
| Choice Hotels Intern |
| Marks and Spencer |
Choice Hotels and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Marks
The main advantage of trading using opposite Choice Hotels and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Choice Hotels vs. Warner Music Group | Choice Hotels vs. GLOBUS MEDICAL A | Choice Hotels vs. SINGAPORE AIRLINES | Choice Hotels vs. Southwest Airlines Co |
| Marks vs. MIRAMAR HOTEL INV | Marks vs. TRADEDOUBLER AB SK | Marks vs. Fast Retailing Co | Marks 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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