Correlation Between Choice Hotels and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and TotalEnergies 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 TotalEnergies 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 TotalEnergies SE, you can compare the effects of market volatilities on Choice Hotels and TotalEnergies 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 TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and TotalEnergies.
Diversification Opportunities for Choice Hotels and TotalEnergies
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and TotalEnergies is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE 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 TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Choice Hotels i.e., Choice Hotels and TotalEnergies go up and down completely randomly.
Pair Corralation between Choice Hotels and TotalEnergies
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.01 times more return on investment than TotalEnergies. However, Choice Hotels is 1.01 times more volatile than TotalEnergies SE. It trades about 0.22 of its potential returns per unit of risk. TotalEnergies SE is currently generating about -0.12 per unit of risk. If you would invest 11,372 in Choice Hotels International on September 3, 2024 and sell it today you would earn a total of 2,728 from holding Choice Hotels International or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. TotalEnergies SE
Performance |
| Timeline |
| Choice Hotels Intern |
| TotalEnergies SE |
Choice Hotels and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and TotalEnergies
The main advantage of trading using opposite Choice Hotels and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' 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 |
| TotalEnergies vs. MARKET VECTR RETAIL | TotalEnergies vs. MELIA HOTELS | TotalEnergies vs. Choice Hotels International | TotalEnergies vs. Meli Hotels International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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