Correlation Between Braemar Hotels and Choice Properties

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

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

Diversification Opportunities for Braemar Hotels and Choice Properties

0.28

Correlation Coefficient

Braemar Hotels  Choice Properties

Modest diversification

The 3 months correlation between Braemar and Choice is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real and Braemar Hotels 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 Braemar Hotels Resorts are associated (or correlated) with Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Choice Properties go up and down completely randomly.

Pair Corralation between Braemar Hotels and Choice Properties

Assuming the 90 days trading horizon Braemar Hotels is expected to generate 19.52 times less return on investment than Choice Properties. But when comparing it to its historical volatility, Braemar Hotels Resorts is 3.32 times less risky than Choice Properties. It trades about 0.03 of its potential returns per unit of risk. Choice Properties Real is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Choice Properties Real on December 29, 2024 and sell it today you would earn a total of  280.00  from holding Choice Properties Real or generate 40.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

Braemar Hotels Resorts  vs.  Choice Properties Real

Braemar Hotels Resorts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Braemar Hotels Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Braemar Hotels is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Choice Properties Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Properties Real are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Choice Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Braemar Hotels and Choice Properties

The main advantage of trading using opposite Braemar Hotels and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels position performs unexpectedly, Choice Properties 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 Properties will offset losses from the drop in Choice Properties' long position.

The idea behind Braemar Hotels Resorts and Choice Properties Real 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.