Correlation Between KENEDIX OFFICE and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both KENEDIX OFFICE 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 KENEDIX OFFICE and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENEDIX OFFICE INV and Choice Hotels International, you can compare the effects of market volatilities on KENEDIX OFFICE 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 KENEDIX OFFICE with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENEDIX OFFICE and Choice Hotels.
Diversification Opportunities for KENEDIX OFFICE and Choice Hotels
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KENEDIX and Choice is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV 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 KENEDIX OFFICE 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 KENEDIX OFFICE INV 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 KENEDIX OFFICE i.e., KENEDIX OFFICE and Choice Hotels go up and down completely randomly.
Pair Corralation between KENEDIX OFFICE and Choice Hotels
Assuming the 90 days horizon KENEDIX OFFICE INV is expected to under-perform the Choice Hotels. But the stock apears to be less risky and, when comparing its historical volatility, KENEDIX OFFICE INV is 1.36 times less risky than Choice Hotels. The stock trades about -0.02 of its potential returns per unit of risk. The Choice Hotels International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,404 in Choice Hotels International on August 31, 2024 and sell it today you would earn a total of 3,696 from holding Choice Hotels International or generate 35.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENEDIX OFFICE INV vs. Choice Hotels International
Performance |
| Timeline |
| KENEDIX OFFICE INV |
| Choice Hotels Intern |
KENEDIX OFFICE and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENEDIX OFFICE and Choice Hotels
The main advantage of trading using opposite KENEDIX OFFICE and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENEDIX OFFICE 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.| KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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