Correlation Between Chesapeake Utilities and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities 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 Chesapeake Utilities and Diamondrock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Diamondrock Hospitality Co, you can compare the effects of market volatilities on Chesapeake Utilities 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 Chesapeake Utilities with a short position of Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Diamondrock Hospitality.
Diversification Opportunities for Chesapeake Utilities and Diamondrock Hospitality
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chesapeake and Diamondrock is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Diamondrock Hospitality Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities i.e., Chesapeake Utilities and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Diamondrock Hospitality
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.75 times more return on investment than Diamondrock Hospitality. However, Chesapeake Utilities is 1.34 times less risky than Diamondrock Hospitality. It trades about -0.03 of its potential returns per unit of risk. Diamondrock Hospitality Co is currently generating about -0.15 per unit of risk. If you would invest 11,938 in Chesapeake Utilities on January 27, 2025 and sell it today you would lose (438.00) from holding Chesapeake Utilities or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Diamondrock Hospitality Co
Performance |
| Timeline |
| Chesapeake Utilities |
| Diamondrock Hospitality |
Chesapeake Utilities and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Diamondrock Hospitality
The main advantage of trading using opposite Chesapeake Utilities and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities 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.| Chesapeake Utilities vs. WT OFFSHORE | Chesapeake Utilities vs. CVR Medical Corp | Chesapeake Utilities vs. SOLSTAD OFFSHORE NK | Chesapeake Utilities vs. MEDICAL FACILITIES NEW |
| Diamondrock Hospitality vs. HEALTHSTREAM | Diamondrock Hospitality vs. MPH Health Care | Diamondrock Hospitality vs. Molina Healthcare | Diamondrock Hospitality vs. UNIVERSAL MUSIC GROUP |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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