Correlation Between G-III APPAREL and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both G-III APPAREL 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 G-III APPAREL and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III APPAREL GROUP and Choice Hotels International, you can compare the effects of market volatilities on G-III APPAREL 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 G-III APPAREL with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III APPAREL and Choice Hotels.
Diversification Opportunities for G-III APPAREL and Choice Hotels
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between G-III and Choice is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding G III APPAREL GROUP 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 G-III APPAREL 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 G III APPAREL GROUP 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 G-III APPAREL i.e., G-III APPAREL and Choice Hotels go up and down completely randomly.
Pair Corralation between G-III APPAREL and Choice Hotels
Assuming the 90 days trading horizon G III APPAREL GROUP is expected to under-perform the Choice Hotels. In addition to that, G-III APPAREL is 1.28 times more volatile than Choice Hotels International. It trades about -0.25 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.13 per unit of volatility. If you would invest 13,600 in Choice Hotels International on November 27, 2024 and sell it today you would earn a total of 600.00 from holding Choice Hotels International or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III APPAREL GROUP vs. Choice Hotels International
Performance |
| Timeline |
| G III APPAREL |
| Choice Hotels Intern |
G-III APPAREL and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G-III APPAREL and Choice Hotels
The main advantage of trading using opposite G-III APPAREL and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III APPAREL 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.| G-III APPAREL vs. CARSALESCOM | G-III APPAREL vs. Corporate Travel Management | G-III APPAREL vs. Geely Automobile Holdings | G-III APPAREL vs. AWILCO DRILLING PLC |
| Choice Hotels vs. Daito Trust Construction | Choice Hotels vs. RETAIL FOOD GROUP | Choice Hotels vs. North American Construction | Choice Hotels vs. Tokyu Construction Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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