Correlation Between ECHO INVESTMENT and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT 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 ECHO INVESTMENT and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and Choice Hotels International, you can compare the effects of market volatilities on ECHO INVESTMENT 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 ECHO INVESTMENT with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Choice Hotels.
Diversification Opportunities for ECHO INVESTMENT and Choice Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECHO and Choice is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY 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 ECHO INVESTMENT 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 ECHO INVESTMENT ZY 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 ECHO INVESTMENT i.e., ECHO INVESTMENT and Choice Hotels go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and Choice Hotels
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.43 times more return on investment than Choice Hotels. However, ECHO INVESTMENT is 1.43 times more volatile than Choice Hotels International. It trades about 0.06 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.04 per unit of risk. If you would invest 54.00 in ECHO INVESTMENT ZY on December 2, 2024 and sell it today you would earn a total of 47.00 from holding ECHO INVESTMENT ZY or generate 87.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ECHO INVESTMENT ZY vs. Choice Hotels International
Performance |
Timeline |
ECHO INVESTMENT ZY |
Choice Hotels Intern |
ECHO INVESTMENT and Choice Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ECHO INVESTMENT and Choice Hotels
The main advantage of trading using opposite ECHO INVESTMENT and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT 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.ECHO INVESTMENT vs. Liberty Broadband | ECHO INVESTMENT vs. PennyMac Mortgage Investment | ECHO INVESTMENT vs. JLF INVESTMENT | ECHO INVESTMENT vs. MEDCAW INVESTMENTS LS 01 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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