Correlation Between Everi Holdings and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Everi Holdings 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 Everi Holdings and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everi Holdings and Choice Hotels International, you can compare the effects of market volatilities on Everi Holdings 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 Everi Holdings with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everi Holdings and Choice Hotels.
Diversification Opportunities for Everi Holdings and Choice Hotels
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Everi and Choice is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings 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 Everi Holdings 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 Everi Holdings 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 Everi Holdings i.e., Everi Holdings and Choice Hotels go up and down completely randomly.
Pair Corralation between Everi Holdings and Choice Hotels
Given the investment horizon of 90 days Everi Holdings is expected to generate 7.48 times less return on investment than Choice Hotels. But when comparing it to its historical volatility, Everi Holdings is 5.53 times less risky than Choice Hotels. It trades about 0.21 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 14,100 in Choice Hotels International on August 30, 2024 and sell it today you would earn a total of 961.00 from holding Choice Hotels International or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everi Holdings vs. Choice Hotels International
Performance |
| Timeline |
| Everi Holdings |
| Choice Hotels Intern |
Everi Holdings and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everi Holdings and Choice Hotels
The main advantage of trading using opposite Everi Holdings and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings 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.| Everi Holdings vs. Accel Entertainment | Everi Holdings vs. Light Wonder | Everi Holdings vs. Inspired Entertainment | Everi Holdings vs. International Game Technology |
| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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