Correlation Between Choice Hotels and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES, you can compare the effects of market volatilities on Choice Hotels and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and SINGAPORE AIRLINES.
Diversification Opportunities for Choice Hotels and SINGAPORE AIRLINES
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Choice and SINGAPORE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of Choice Hotels i.e., Choice Hotels and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between Choice Hotels and SINGAPORE AIRLINES
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.46 times more return on investment than SINGAPORE AIRLINES. However, Choice Hotels is 1.46 times more volatile than SINGAPORE AIRLINES. It trades about 0.32 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.07 per unit of risk. If you would invest 12,700 in Choice Hotels International on September 2, 2024 and sell it today you would earn a total of 1,400 from holding Choice Hotels International or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| Choice Hotels Intern |
| SINGAPORE AIRLINES |
Choice Hotels and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and SINGAPORE AIRLINES
The main advantage of trading using opposite Choice Hotels and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's long position.| Choice Hotels vs. Coeur Mining | Choice Hotels vs. MINCO SILVER | Choice Hotels vs. FORMPIPE SOFTWARE AB | Choice Hotels vs. Calibre Mining Corp |
| SINGAPORE AIRLINES vs. SIVERS SEMICONDUCTORS AB | SINGAPORE AIRLINES vs. Darden Restaurants | SINGAPORE AIRLINES vs. Reliance Steel Aluminum | SINGAPORE AIRLINES vs. Q2M Managementberatung AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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