Correlation Between Braemar Hotel and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Braemar Hotel 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 Braemar Hotel and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braemar Hotel Resorts and DiamondRock Hospitality, you can compare the effects of market volatilities on Braemar Hotel 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 Braemar Hotel with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotel and DiamondRock Hospitality.
Diversification Opportunities for Braemar Hotel and DiamondRock Hospitality
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Braemar and DiamondRock is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotel Resorts and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Braemar Hotel 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 Braemar Hotel Resorts 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 Braemar Hotel i.e., Braemar Hotel and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Braemar Hotel and DiamondRock Hospitality
Considering the 90-day investment horizon Braemar Hotel Resorts is expected to generate 11.85 times more return on investment than DiamondRock Hospitality. However, Braemar Hotel is 11.85 times more volatile than DiamondRock Hospitality. It trades about 0.09 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.16 per unit of risk. If you would invest 259.00 in Braemar Hotel Resorts on September 1, 2024 and sell it today you would earn a total of 101.00 from holding Braemar Hotel Resorts or generate 39.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braemar Hotel Resorts vs. DiamondRock Hospitality
Performance |
| Timeline |
| Braemar Hotel Resorts |
| DiamondRock Hospitality |
Braemar Hotel and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotel and DiamondRock Hospitality
The main advantage of trading using opposite Braemar Hotel and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotel 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.| Braemar Hotel vs. Summit Hotel Properties | Braemar Hotel vs. Service Properties Trust | Braemar Hotel vs. InnSuites Hospitality Trust | Braemar Hotel vs. Sotherly Hotels PR |
| DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Service Properties Trust | DiamondRock Hospitality vs. Braemar Hotel Resorts | DiamondRock Hospitality vs. Summit Hotel Properties |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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