Correlation Between Choice Hotels and Interactive Strength

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

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

Diversification Opportunities for Choice Hotels and Interactive Strength

-0.43

Correlation Coefficient

Choice Hotels  Interactive Strength

Very good diversification

The 3 months correlation between Choice and Interactive is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Interactive Strength Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Strength and Choice 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 Choice Hotels International are associated (or correlated) with Interactive Strength. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Strength has no effect on the direction of Choice Hotels i.e., Choice Hotels and Interactive Strength go up and down completely randomly.

Pair Corralation between Choice Hotels and Interactive Strength

Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.11 times more return on investment than Interactive Strength. However, Choice Hotels International is 9.01 times less risky than Interactive Strength. It trades about 0.06 of its potential returns per unit of risk. Interactive Strength Common is currently generating about -0.13 per unit of risk. If you would invest  11,991  in Choice Hotels International on December 2, 2024 and sell it today you would earn a total of  2,338  from holding Choice Hotels International or generate 19.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Choice Hotels International  vs.  Interactive Strength Common

Choice Hotels Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Choice Hotels International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Choice Hotels is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Interactive Strength

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Strength Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Interactive Strength reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Choice Hotels and Interactive Strength

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

The idea behind Choice Hotels International and Interactive Strength Common 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.