Correlation Between Marie Brizard and Choice Hotels

Can any of the company-specific risk be diversified away by investing in both Marie Brizard 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 Marie Brizard and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marie Brizard Wine and Choice Hotels International, you can compare the effects of market volatilities on Marie Brizard 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 Marie Brizard with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marie Brizard and Choice Hotels.

Diversification Opportunities for Marie Brizard and Choice Hotels

0.0

Correlation Coefficient

Marie Brizard  Choice Hotels

Pay attention - limited upside

The 3 months correlation between Marie and Choice is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marie Brizard Wine 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 Marie Brizard 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 Marie Brizard Wine 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 Marie Brizard i.e., Marie Brizard and Choice Hotels go up and down completely randomly.

Pair Corralation between Marie Brizard and Choice Hotels

Assuming the 90 days horizon Marie Brizard Wine is expected to generate 0.94 times more return on investment than Choice Hotels. However, Marie Brizard Wine is 1.07 times less risky than Choice Hotels. It trades about 0.08 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.03 per unit of risk. If you would invest  213.00  in Marie Brizard Wine on October 11, 2024 and sell it today you would earn a total of  160.00  from holding Marie Brizard Wine or generate 75.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Marie Brizard Wine  vs.  Choice Hotels International

Marie Brizard Wine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marie Brizard Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marie Brizard is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Choice Hotels Intern

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Hotels International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Choice Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marie Brizard and Choice Hotels

The main advantage of trading using opposite Marie Brizard and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marie Brizard 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.

The idea behind Marie Brizard Wine and Choice Hotels International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.