Correlation Between Choice Hotels and Siemens Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha 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 Siemens Aktiengesellschaft, you can compare the effects of market volatilities on Choice Hotels and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Siemens Aktiengesellscha.
Diversification Opportunities for Choice Hotels and Siemens Aktiengesellscha
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Choice and Siemens is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of Choice Hotels i.e., Choice Hotels and Siemens Aktiengesellscha go up and down completely randomly.
Pair Corralation between Choice Hotels and Siemens Aktiengesellscha
Assuming the 90 days horizon Choice Hotels is expected to generate 1.9 times less return on investment than Siemens Aktiengesellscha. In addition to that, Choice Hotels is 1.1 times more volatile than Siemens Aktiengesellschaft. It trades about 0.04 of its total potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about 0.08 per unit of volatility. If you would invest 13,119 in Siemens Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 6,169 from holding Siemens Aktiengesellschaft or generate 47.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Siemens Aktiengesellschaft
Performance |
| Timeline |
| Choice Hotels Intern |
| Siemens Aktiengesellscha |
Choice Hotels and Siemens Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Siemens Aktiengesellscha
The main advantage of trading using opposite Choice Hotels and Siemens Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Siemens Aktiengesellscha 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 Siemens Aktiengesellscha will offset losses from the drop in Siemens Aktiengesellscha's long position.| Choice Hotels vs. SIEM OFFSHORE NEW | Choice Hotels vs. ULTRA CLEAN HLDGS | Choice Hotels vs. MSAD INSURANCE | Choice Hotels vs. Goosehead Insurance |
| Siemens Aktiengesellscha vs. MELIA HOTELS | Siemens Aktiengesellscha vs. Harmony Gold Mining | Siemens Aktiengesellscha vs. Choice Hotels International | Siemens Aktiengesellscha vs. PPHE HOTEL 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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