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
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ECHO and Choice is 0.26. 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 0.91 times more return on investment than Choice Hotels. However, ECHO INVESTMENT ZY is 1.1 times less risky than Choice Hotels. It trades about -0.04 of its potential returns per unit of risk. Choice Hotels International is currently generating about -0.08 per unit of risk. If you would invest 106.00 in ECHO INVESTMENT ZY on December 28, 2024 and sell it today you would lose (5.00) from holding ECHO INVESTMENT ZY or give up 4.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very 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. Alibaba Health Information | ECHO INVESTMENT vs. Cass Information Systems | ECHO INVESTMENT vs. Elmos Semiconductor SE | ECHO INVESTMENT vs. Stewart Information Services |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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