Correlation Between WILLIS LEASE and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE 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 WILLIS LEASE and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WILLIS LEASE FIN and Choice Hotels International, you can compare the effects of market volatilities on WILLIS LEASE 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 WILLIS LEASE with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Choice Hotels.
Diversification Opportunities for WILLIS LEASE and Choice Hotels
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WILLIS and Choice is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN 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 WILLIS LEASE 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 WILLIS LEASE FIN 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 WILLIS LEASE i.e., WILLIS LEASE and Choice Hotels go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Choice Hotels
Assuming the 90 days horizon WILLIS LEASE FIN is expected to under-perform the Choice Hotels. In addition to that, WILLIS LEASE is 2.64 times more volatile than Choice Hotels International. It trades about -0.03 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.09 per unit of volatility. If you would invest 13,272 in Choice Hotels International on November 7, 2024 and sell it today you would earn a total of 928.00 from holding Choice Hotels International or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Choice Hotels International
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Choice Hotels Intern |
WILLIS LEASE and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Choice Hotels
The main advantage of trading using opposite WILLIS LEASE and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE 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.| WILLIS LEASE vs. CENTURIA OFFICE REIT | WILLIS LEASE vs. BOSTON BEER A | WILLIS LEASE vs. Suntory Beverage Food | WILLIS LEASE vs. American Homes 4 |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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