Correlation Between Choice Hotels and CME
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and CME 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 CME 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 CME Group, you can compare the effects of market volatilities on Choice Hotels and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and CME.
Diversification Opportunities for Choice Hotels and CME
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Choice and CME is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Choice Hotels i.e., Choice Hotels and CME go up and down completely randomly.
Pair Corralation between Choice Hotels and CME
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.21 times more return on investment than CME. However, Choice Hotels is 1.21 times more volatile than CME Group. It trades about 0.1 of its potential returns per unit of risk. CME Group is currently generating about 0.03 per unit of risk. If you would invest 13,600 in Choice Hotels International on November 4, 2024 and sell it today you would earn a total of 400.00 from holding Choice Hotels International or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. CME Group
Performance |
| Timeline |
| Choice Hotels Intern |
| CME Group |
Choice Hotels and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and CME
The main advantage of trading using opposite Choice Hotels and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Choice Hotels vs. Sanyo Chemical Industries | Choice Hotels vs. INDO RAMA SYNTHETIC | Choice Hotels vs. DALATA HOTEL | Choice Hotels vs. SILICON LABORATOR |
| CME vs. SAFEROADS HLDGS | CME vs. BII Railway Transportation | CME vs. RYU Apparel | CME vs. Scandinavian Tobacco Group |
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 .
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |