Correlation Between Alstria Office and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Alstria Office 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 Alstria Office and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between alstria office REIT AG and DiamondRock Hospitality, you can compare the effects of market volatilities on Alstria Office 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 Alstria Office with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and DiamondRock Hospitality.
Diversification Opportunities for Alstria Office and DiamondRock Hospitality
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alstria and DiamondRock is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Alstria Office 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 alstria office REIT AG 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 Alstria Office i.e., Alstria Office and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Alstria Office and DiamondRock Hospitality
Assuming the 90 days horizon alstria office REIT AG is expected to generate 1.35 times more return on investment than DiamondRock Hospitality. However, Alstria Office is 1.35 times more volatile than DiamondRock Hospitality. It trades about 0.17 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.06 per unit of risk. If you would invest 712.00 in alstria office REIT AG on September 23, 2024 and sell it today you would earn a total of 48.00 from holding alstria office REIT AG or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
alstria office REIT AG vs. DiamondRock Hospitality
Performance |
| Timeline |
| alstria office REIT |
| DiamondRock Hospitality |
Alstria Office and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstria Office and DiamondRock Hospitality
The main advantage of trading using opposite Alstria Office and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office 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.| Alstria Office vs. EAT WELL INVESTMENT | Alstria Office vs. ScanSource | Alstria Office vs. National Beverage Corp | Alstria Office vs. Gladstone Investment |
| DiamondRock Hospitality vs. EBRO FOODS | DiamondRock Hospitality vs. alstria office REIT AG | DiamondRock Hospitality vs. Thai Beverage Public | DiamondRock Hospitality vs. CENTURIA OFFICE REIT |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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