Correlation Between Choice Hotels and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Delta Electronics 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 Delta Electronics 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 Delta Electronics Public, you can compare the effects of market volatilities on Choice Hotels and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Delta Electronics.
Diversification Opportunities for Choice Hotels and Delta Electronics
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Choice and Delta is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of Choice Hotels i.e., Choice Hotels and Delta Electronics go up and down completely randomly.
Pair Corralation between Choice Hotels and Delta Electronics
Assuming the 90 days horizon Choice Hotels is expected to generate 3.14 times less return on investment than Delta Electronics. But when comparing it to its historical volatility, Choice Hotels International is 2.3 times less risky than Delta Electronics. It trades about 0.09 of its potential returns per unit of risk. Delta Electronics Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 157.00 in Delta Electronics Public on September 3, 2024 and sell it today you would earn a total of 249.00 from holding Delta Electronics Public or generate 158.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Delta Electronics Public
Performance |
| Timeline |
| Choice Hotels Intern |
| Delta Electronics Public |
Choice Hotels and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Delta Electronics
The main advantage of trading using opposite Choice Hotels and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' 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 |
| Delta Electronics vs. Games Workshop Group | Delta Electronics vs. TROPHY GAMES DEV | Delta Electronics vs. Zoom Video Communications | Delta Electronics vs. MAROC TELECOM |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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