Correlation Between Halma Plc and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Halma Plc 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 Halma Plc and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and Choice Hotels International, you can compare the effects of market volatilities on Halma Plc 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 Halma Plc with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Choice Hotels.
Diversification Opportunities for Halma Plc and Choice Hotels
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Halma and Choice is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc 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 Halma Plc 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 Halma plc 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 Halma Plc i.e., Halma Plc and Choice Hotels go up and down completely randomly.
Pair Corralation between Halma Plc and Choice Hotels
Assuming the 90 days horizon Halma plc is expected to under-perform the Choice Hotels. In addition to that, Halma Plc is 1.41 times more volatile than Choice Hotels International. It trades about -0.1 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.02 per unit of volatility. If you would invest 13,771 in Choice Hotels International on October 17, 2024 and sell it today you would earn a total of 29.00 from holding Choice Hotels International or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halma plc vs. Choice Hotels International
Performance |
| Timeline |
| Halma plc |
| Choice Hotels Intern |
Halma Plc and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and Choice Hotels
The main advantage of trading using opposite Halma Plc and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc 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.| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
| Choice Hotels vs. Eurasia Mining Plc | Choice Hotels vs. Park Hotels Resorts | Choice Hotels vs. MIRAMAR HOTEL INV | Choice Hotels vs. Sunstone Hotel Investors |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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