Correlation Between Choice Hotels and Thermon Group
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Thermon Group 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 Thermon Group 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 Thermon Group Holdings, you can compare the effects of market volatilities on Choice Hotels and Thermon Group 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 Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Thermon Group.
Diversification Opportunities for Choice Hotels and Thermon Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and Thermon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group 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 Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of Choice Hotels i.e., Choice Hotels and Thermon Group go up and down completely randomly.
Pair Corralation between Choice Hotels and Thermon Group
Considering the 90-day investment horizon Choice Hotels International is expected to under-perform the Thermon Group. But the stock apears to be less risky and, when comparing its historical volatility, Choice Hotels International is 1.35 times less risky than Thermon Group. The stock trades about -0.19 of its potential returns per unit of risk. The Thermon Group Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,626 in Thermon Group Holdings on September 2, 2025 and sell it today you would earn a total of 884.00 from holding Thermon Group Holdings or generate 33.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Thermon Group Holdings
Performance |
| Timeline |
| Choice Hotels Intern |
| Thermon Group Holdings |
Choice Hotels and Thermon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Thermon Group
The main advantage of trading using opposite Choice Hotels and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Thermon Group 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 Thermon Group will offset losses from the drop in Thermon Group's long position.| Choice Hotels vs. Teradata Corp | Choice Hotels vs. Baristas Coffee | Choice Hotels vs. Darden Restaurants | Choice Hotels vs. Black Rock Coffee |
| Thermon Group vs. Summit Hotel Properties | Thermon Group vs. BCP Investment Corp | Thermon Group vs. AG Mortgage Investment | Thermon Group vs. Choice Hotels International |
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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