Correlation Between Diamondrock Hospitality and Service Properties
Can any of the company-specific risk be diversified away by investing in both Diamondrock Hospitality and Service Properties 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 Diamondrock Hospitality and Service Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondrock Hospitality and Service Properties Trust, you can compare the effects of market volatilities on Diamondrock Hospitality and Service Properties 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 Diamondrock Hospitality with a short position of Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondrock Hospitality and Service Properties.
Diversification Opportunities for Diamondrock Hospitality and Service Properties
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamondrock and Service is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust and Diamondrock Hospitality 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 Diamondrock Hospitality are associated (or correlated) with Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Diamondrock Hospitality i.e., Diamondrock Hospitality and Service Properties go up and down completely randomly.
Pair Corralation between Diamondrock Hospitality and Service Properties
Considering the 90-day investment horizon Diamondrock Hospitality is expected to under-perform the Service Properties. But the stock apears to be less risky and, when comparing its historical volatility, Diamondrock Hospitality is 2.01 times less risky than Service Properties. The stock trades about -0.04 of its potential returns per unit of risk. The Service Properties Trust is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Service Properties Trust on November 2, 2024 and sell it today you would earn a total of 36.00 from holding Service Properties Trust or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondrock Hospitality vs. Service Properties Trust
Performance |
| Timeline |
| Diamondrock Hospitality |
| Service Properties Trust |
Diamondrock Hospitality and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondrock Hospitality and Service Properties
The main advantage of trading using opposite Diamondrock Hospitality and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' long position.| Diamondrock Hospitality vs. Summit Hotel Properties | Diamondrock Hospitality vs. RLJ Lodging Trust | Diamondrock Hospitality vs. Pebblebrook Hotel Trust | Diamondrock Hospitality vs. Sunstone Hotel Investors |
| Service Properties vs. EMCOR Group | Service Properties vs. Coty Inc | Service Properties vs. Hafnia Limited | Service Properties vs. Parker Hannifin |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stocks Directory Find actively traded stocks across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Global Correlations Find global opportunities by holding instruments from different markets |