Correlation Between Choice Hotels and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Hilton Worldwide 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 Hilton Worldwide 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 Hilton Worldwide Holdings, you can compare the effects of market volatilities on Choice Hotels and Hilton Worldwide 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 Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Hilton Worldwide.
Diversification Opportunities for Choice Hotels and Hilton Worldwide
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and Hilton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings 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 Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Choice Hotels i.e., Choice Hotels and Hilton Worldwide go up and down completely randomly.
Pair Corralation between Choice Hotels and Hilton Worldwide
Considering the 90-day investment horizon Choice Hotels International is expected to under-perform the Hilton Worldwide. In addition to that, Choice Hotels is 1.54 times more volatile than Hilton Worldwide Holdings. It trades about -0.31 of its total potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about -0.27 per unit of volatility. If you would invest 21,051 in Hilton Worldwide Holdings on January 20, 2024 and sell it today you would lose (1,169) from holding Hilton Worldwide Holdings or give up 5.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Hilton Worldwide Holdings
Performance |
| Timeline |
| Choice Hotels Intern |
| Hilton Worldwide Holdings |
Choice Hotels and Hilton Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Hilton Worldwide
The main advantage of trading using opposite Choice Hotels and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide's long position.| Choice Hotels vs. Yatra Online | Choice Hotels vs. Despegar Corp | Choice Hotels vs. Mondee Holdings | Choice Hotels vs. MakeMyTrip Limited |
| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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