Correlation Between London Stock and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both London Stock 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 London Stock and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Stock Exchange and Choice Hotels International, you can compare the effects of market volatilities on London Stock 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 London Stock with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Stock and Choice Hotels.
Diversification Opportunities for London Stock and Choice Hotels
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Choice is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding London Stock Exchange 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 London Stock 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 London Stock Exchange 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 London Stock i.e., London Stock and Choice Hotels go up and down completely randomly.
Pair Corralation between London Stock and Choice Hotels
If you would invest 13,371 in Choice Hotels International on October 24, 2024 and sell it today you would earn a total of 129.00 from holding Choice Hotels International or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 5.88% |
| Values | Daily Returns |
London Stock Exchange vs. Choice Hotels International
Performance |
| Timeline |
| London Stock Exchange |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Choice Hotels Intern |
London Stock and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Stock and Choice Hotels
The main advantage of trading using opposite London Stock and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Stock 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.| London Stock vs. Cairo Communication SpA | London Stock vs. Spirent Communications plc | London Stock vs. Zoom Video Communications | London Stock vs. Singapore Telecommunications Limited |
| Choice Hotels vs. CyberArk Software | Choice Hotels vs. Check Point Software | Choice Hotels vs. MAGIC SOFTWARE ENTR | Choice Hotels vs. MGIC INVESTMENT |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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