Correlation Between Regions Financial and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Regions Financial 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 Regions Financial and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Choice Hotels International, you can compare the effects of market volatilities on Regions Financial 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 Regions Financial with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Choice Hotels.
Diversification Opportunities for Regions Financial and Choice Hotels
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and Choice is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial 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 Regions Financial 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 Regions Financial 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 Regions Financial i.e., Regions Financial and Choice Hotels go up and down completely randomly.
Pair Corralation between Regions Financial and Choice Hotels
Assuming the 90 days horizon Regions Financial is expected to generate 1.74 times more return on investment than Choice Hotels. However, Regions Financial is 1.74 times more volatile than Choice Hotels International. It trades about 0.3 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.29 per unit of risk. If you would invest 2,200 in Regions Financial on August 31, 2024 and sell it today you would earn a total of 400.00 from holding Regions Financial or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Choice Hotels International
Performance |
| Timeline |
| Regions Financial |
| Choice Hotels Intern |
Regions Financial and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Choice Hotels
The main advantage of trading using opposite Regions Financial and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial 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.| Regions Financial vs. MOLSON RS BEVERAGE | Regions Financial vs. AOI Electronics Co | Regions Financial vs. Benchmark Electronics | Regions Financial vs. UMC Electronics Co |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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