Correlation Between DiamondRock Hospitality and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Medtronic PLC 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 Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Medtronic PLC, you can compare the effects of market volatilities on DiamondRock Hospitality and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Medtronic PLC.
Diversification Opportunities for DiamondRock Hospitality and Medtronic PLC
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between DiamondRock and Medtronic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Medtronic PLC go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Medtronic PLC
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 2.93 times more return on investment than Medtronic PLC. However, DiamondRock Hospitality is 2.93 times more volatile than Medtronic PLC. It trades about 0.03 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.03 per unit of risk. If you would invest 732.00 in DiamondRock Hospitality on September 13, 2024 and sell it today you would earn a total of 183.00 from holding DiamondRock Hospitality or generate 25.0% 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. Medtronic PLC
Performance |
| Timeline |
| DiamondRock Hospitality |
| Medtronic PLC |
DiamondRock Hospitality and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Medtronic PLC
The main advantage of trading using opposite DiamondRock Hospitality and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB |
| Medtronic PLC vs. GUARDANT HEALTH CL | Medtronic PLC vs. EPSILON HEALTHCARE LTD | Medtronic PLC vs. MEDICAL FACILITIES NEW | Medtronic PLC vs. DiamondRock Hospitality |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |