Correlation Between Choice Hotels and NEXANS
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and NEXANS 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 NEXANS 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 NEXANS, you can compare the effects of market volatilities on Choice Hotels and NEXANS 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 NEXANS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and NEXANS.
Diversification Opportunities for Choice Hotels and NEXANS
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and NEXANS is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and NEXANS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS 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 NEXANS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS has no effect on the direction of Choice Hotels i.e., Choice Hotels and NEXANS go up and down completely randomly.
Pair Corralation between Choice Hotels and NEXANS
Assuming the 90 days horizon Choice Hotels International is expected to under-perform the NEXANS. In addition to that, Choice Hotels is 1.01 times more volatile than NEXANS. It trades about -0.17 of its total potential returns per unit of risk. NEXANS is currently generating about -0.03 per unit of volatility. If you would invest 10,490 in NEXANS on September 23, 2024 and sell it today you would lose (110.00) from holding NEXANS or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. NEXANS
Performance |
| Timeline |
| Choice Hotels Intern |
| NEXANS |
Choice Hotels and NEXANS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and NEXANS
The main advantage of trading using opposite Choice Hotels and NEXANS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, NEXANS 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 NEXANS will offset losses from the drop in NEXANS's long position.| Choice Hotels vs. Take Two Interactive Software | Choice Hotels vs. QIIWI GAMES AB | Choice Hotels vs. CPU SOFTWAREHOUSE | Choice Hotels vs. BRAGG GAMING GRP |
| NEXANS vs. Choice Hotels International | NEXANS vs. Japan Tobacco | NEXANS vs. PPHE HOTEL GROUP | NEXANS vs. DALATA HOTEL |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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