Correlation Between CHIBA BANK and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK 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 CHIBA BANK and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and DiamondRock Hospitality, you can compare the effects of market volatilities on CHIBA BANK 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 CHIBA BANK with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and DiamondRock Hospitality.
Diversification Opportunities for CHIBA BANK and DiamondRock Hospitality
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHIBA and DiamondRock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK i.e., CHIBA BANK and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between CHIBA BANK and DiamondRock Hospitality
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 1.25 times more return on investment than DiamondRock Hospitality. However, CHIBA BANK is 1.25 times more volatile than DiamondRock Hospitality. It trades about 0.02 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about -0.01 per unit of risk. If you would invest 750.00 in CHIBA BANK on October 26, 2024 and sell it today you would earn a total of 5.00 from holding CHIBA BANK or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
CHIBA BANK vs. DiamondRock Hospitality
Performance |
| Timeline |
| CHIBA BANK |
| DiamondRock Hospitality |
CHIBA BANK and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and DiamondRock Hospitality
The main advantage of trading using opposite CHIBA BANK and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK 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.| CHIBA BANK vs. China Resources Beer | CHIBA BANK vs. SAN MIGUEL BREWERY | CHIBA BANK vs. GigaMedia | CHIBA BANK vs. REMEDY ENTERTAINMENT OYJ |
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.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |