Correlation Between Ecotel Communication and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Ecotel Communication and Choice Hotels 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 Ecotel Communication and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ecotel communication ag and Choice Hotels International, you can compare the effects of market volatilities on Ecotel Communication and Choice Hotels 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 Ecotel Communication with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Choice Hotels.
Diversification Opportunities for Ecotel Communication and Choice Hotels
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ecotel and Choice is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Choice Hotels go up and down completely randomly.
Pair Corralation between Ecotel Communication and Choice Hotels
Assuming the 90 days trading horizon ecotel communication ag is expected to generate 0.93 times more return on investment than Choice Hotels. However, ecotel communication ag is 1.07 times less risky than Choice Hotels. It trades about 0.08 of its potential returns per unit of risk. Choice Hotels International is currently generating about -0.06 per unit of risk. If you would invest 1,380 in ecotel communication ag on October 30, 2024 and sell it today you would earn a total of 50.00 from holding ecotel communication ag or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ecotel communication ag vs. Choice Hotels International
Performance |
| Timeline |
| ecotel communication |
| Choice Hotels Intern |
Ecotel Communication and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecotel Communication and Choice Hotels
The main advantage of trading using opposite Ecotel Communication and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecotel Communication position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Ecotel Communication vs. Iridium Communications | Ecotel Communication vs. Magnachip Semiconductor | Ecotel Communication vs. TOREX SEMICONDUCTOR LTD | Ecotel Communication vs. Cairo Communication SpA |
| Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. CVR Medical Corp | Choice Hotels vs. ONWARD MEDICAL BV | Choice Hotels vs. DAIDO METAL TD |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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