Correlation Between Gold Road and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and DiamondRock Hospitality, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and DiamondRock Hospitality.
Diversification Opportunities for Gold Road and DiamondRock Hospitality
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and DiamondRock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Gold Road and DiamondRock Hospitality
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.83 times more return on investment than DiamondRock Hospitality. However, Gold Road is 1.83 times more volatile than DiamondRock Hospitality. It trades about 0.34 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.2 per unit of risk. If you would invest 106.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Gold Road Resources or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gold Road Resources vs. DiamondRock Hospitality
Performance |
| Timeline |
| Gold Road Resources |
| DiamondRock Hospitality |
Gold Road and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and DiamondRock Hospitality
The main advantage of trading using opposite Gold Road and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
| DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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