Correlation Between Global Ship and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Global Ship and DiamondRock Hospitality 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 Global Ship and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and DiamondRock Hospitality, you can compare the effects of market volatilities on Global Ship and DiamondRock Hospitality 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 Global Ship with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and DiamondRock Hospitality.
Diversification Opportunities for Global Ship and DiamondRock Hospitality
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and DiamondRock is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Global Ship 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 Global Ship Lease are associated (or correlated) with DiamondRock Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiamondRock Hospitality has no effect on the direction of Global Ship i.e., Global Ship and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Global Ship and DiamondRock Hospitality
Assuming the 90 days horizon Global Ship is expected to generate 1.07 times less return on investment than DiamondRock Hospitality. But when comparing it to its historical volatility, Global Ship Lease is 2.01 times less risky than DiamondRock Hospitality. It trades about 0.05 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 757.00 in DiamondRock Hospitality on August 31, 2024 and sell it today you would earn a total of 98.00 from holding DiamondRock Hospitality or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. DiamondRock Hospitality
Performance |
| Timeline |
| Global Ship Lease |
| DiamondRock Hospitality |
Global Ship and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and DiamondRock Hospitality
The main advantage of trading using opposite Global Ship and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, DiamondRock Hospitality 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 DiamondRock Hospitality will offset losses from the drop in DiamondRock Hospitality's long position.| Global Ship vs. Coeur Mining | Global Ship vs. IMAGIN MEDICAL INC | Global Ship vs. AVITA Medical | Global Ship vs. Consolidated Communications Holdings |
| DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. NMI Holdings | DiamondRock Hospitality vs. Origin Agritech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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