Correlation Between WT OFFSHORE and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE 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 WT OFFSHORE and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and Choice Hotels International, you can compare the effects of market volatilities on WT OFFSHORE 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 WT OFFSHORE with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and Choice Hotels.
Diversification Opportunities for WT OFFSHORE and Choice Hotels
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UWV and Choice is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE i.e., WT OFFSHORE and Choice Hotels go up and down completely randomly.
Pair Corralation between WT OFFSHORE and Choice Hotels
Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the Choice Hotels. In addition to that, WT OFFSHORE is 1.88 times more volatile than Choice Hotels International. It trades about -0.07 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.12 per unit of volatility. If you would invest 13,700 in Choice Hotels International on November 7, 2024 and sell it today you would earn a total of 500.00 from holding Choice Hotels International or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT OFFSHORE vs. Choice Hotels International
Performance |
| Timeline |
| WT OFFSHORE |
| Choice Hotels Intern |
WT OFFSHORE and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT OFFSHORE and Choice Hotels
The main advantage of trading using opposite WT OFFSHORE and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE 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.| WT OFFSHORE vs. InterContinental Hotels Group | WT OFFSHORE vs. H2O Retailing | WT OFFSHORE vs. COVIVIO HOTELS INH | WT OFFSHORE vs. Hyatt Hotels |
| Choice Hotels vs. Align Technology | Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. Gaztransport Technigaz SA | Choice Hotels vs. Television Broadcasts Limited |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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