Correlation Between Choice Hotels and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on Choice Hotels and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and HEMISPHERE EGY.
Diversification Opportunities for Choice Hotels and HEMISPHERE EGY
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and HEMISPHERE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Choice Hotels i.e., Choice Hotels and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between Choice Hotels and HEMISPHERE EGY
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.94 times more return on investment than HEMISPHERE EGY. However, Choice Hotels International is 1.07 times less risky than HEMISPHERE EGY. It trades about 0.17 of its potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.1 per unit of risk. If you would invest 10,148 in Choice Hotels International on September 3, 2024 and sell it today you would earn a total of 3,952 from holding Choice Hotels International or generate 38.94% 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. HEMISPHERE EGY
Performance |
| Timeline |
| Choice Hotels Intern |
| HEMISPHERE EGY |
Choice Hotels and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and HEMISPHERE EGY
The main advantage of trading using opposite Choice Hotels and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY'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 |
| HEMISPHERE EGY vs. Neinor Homes SA | HEMISPHERE EGY vs. Cogent Communications Holdings | HEMISPHERE EGY vs. Gamma Communications plc | HEMISPHERE EGY vs. Shenandoah Telecommunications |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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