Correlation Between KB HOME and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both KB HOME 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 KB HOME and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Choice Hotels International, you can compare the effects of market volatilities on KB HOME 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 KB HOME with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Choice Hotels.
Diversification Opportunities for KB HOME and Choice Hotels
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between KBH and Choice is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME 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 KB HOME 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 KB HOME 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 KB HOME i.e., KB HOME and Choice Hotels go up and down completely randomly.
Pair Corralation between KB HOME and Choice Hotels
Assuming the 90 days trading horizon KB HOME is expected to generate 1.21 times less return on investment than Choice Hotels. In addition to that, KB HOME is 1.0 times more volatile than Choice Hotels International. It trades about 0.24 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.29 per unit of volatility. If you would invest 12,800 in Choice Hotels International on August 31, 2024 and sell it today you would earn a total of 1,300 from holding Choice Hotels International or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KB HOME vs. Choice Hotels International
Performance |
| Timeline |
| KB HOME |
| Choice Hotels Intern |
KB HOME and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and Choice Hotels
The main advantage of trading using opposite KB HOME and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME 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.| KB HOME vs. ASURE SOFTWARE | KB HOME vs. BJs Wholesale Club | KB HOME vs. NXP Semiconductors NV | KB HOME vs. JIAHUA STORES |
| Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. ACCOR SPADR NEW |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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