Correlation Between ULTRA CLEAN and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN 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 ULTRA CLEAN and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULTRA CLEAN HLDGS and Choice Hotels International, you can compare the effects of market volatilities on ULTRA CLEAN 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 ULTRA CLEAN with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Choice Hotels.
Diversification Opportunities for ULTRA CLEAN and Choice Hotels
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ULTRA and Choice is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS 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 ULTRA CLEAN 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 ULTRA CLEAN HLDGS 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 ULTRA CLEAN i.e., ULTRA CLEAN and Choice Hotels go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and Choice Hotels
Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 1.37 times less return on investment than Choice Hotels. In addition to that, ULTRA CLEAN is 1.68 times more volatile than Choice Hotels International. It trades about 0.02 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.05 per unit of volatility. If you would invest 10,659 in Choice Hotels International on September 12, 2024 and sell it today you would earn a total of 3,241 from holding Choice Hotels International or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ULTRA CLEAN HLDGS vs. Choice Hotels International
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| Choice Hotels Intern |
ULTRA CLEAN and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and Choice Hotels
The main advantage of trading using opposite ULTRA CLEAN and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN 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.| ULTRA CLEAN vs. WillScot Mobile Mini | ULTRA CLEAN vs. Tower One Wireless | ULTRA CLEAN vs. Ribbon Communications | ULTRA CLEAN vs. T MOBILE US |
| Choice Hotels vs. SIEM OFFSHORE NEW | Choice Hotels vs. ULTRA CLEAN HLDGS | Choice Hotels vs. MSAD INSURANCE | Choice Hotels vs. Goosehead Insurance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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