Correlation Between AGRICULTBK HADR/25 and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR/25 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 AGRICULTBK HADR/25 and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and Choice Hotels International, you can compare the effects of market volatilities on AGRICULTBK HADR/25 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 AGRICULTBK HADR/25 with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR/25 and Choice Hotels.
Diversification Opportunities for AGRICULTBK HADR/25 and Choice Hotels
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGRICULTBK and Choice is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC 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 AGRICULTBK HADR/25 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 AGRICULTBK HADR25 YC 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 AGRICULTBK HADR/25 i.e., AGRICULTBK HADR/25 and Choice Hotels go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR/25 and Choice Hotels
Assuming the 90 days trading horizon AGRICULTBK HADR/25 is expected to generate 57.32 times less return on investment than Choice Hotels. But when comparing it to its historical volatility, AGRICULTBK HADR25 YC is 1.13 times less risky than Choice Hotels. It trades about 0.01 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.32 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. Choice Hotels International
Performance |
| Timeline |
| AGRICULTBK HADR/25 |
| Choice Hotels Intern |
AGRICULTBK HADR/25 and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR/25 and Choice Hotels
The main advantage of trading using opposite AGRICULTBK HADR/25 and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR/25 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.| AGRICULTBK HADR/25 vs. CHINA BANK ADR20 | AGRICULTBK HADR/25 vs. COMMONWBK AUSTRSPADRS | AGRICULTBK HADR/25 vs. The Toronto Dominion Bank | AGRICULTBK HADR/25 vs. Bank of Montreal |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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