Correlation Between DiamondRock Hospitality and HF FOODS
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and HF FOODS 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 HF FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and HF FOODS GRP, you can compare the effects of market volatilities on DiamondRock Hospitality and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and HF FOODS.
Diversification Opportunities for DiamondRock Hospitality and HF FOODS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DiamondRock and 3GX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and HF FOODS go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and HF FOODS
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 0.95 times more return on investment than HF FOODS. However, DiamondRock Hospitality is 1.06 times less risky than HF FOODS. It trades about 0.03 of its potential returns per unit of risk. HF FOODS GRP is currently generating about 0.01 per unit of risk. If you would invest 744.00 in DiamondRock Hospitality on September 4, 2024 and sell it today you would earn a total of 121.00 from holding DiamondRock Hospitality or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. HF FOODS GRP
Performance |
| Timeline |
| DiamondRock Hospitality |
| HF FOODS GRP |
DiamondRock Hospitality and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and HF FOODS
The main advantage of trading using opposite DiamondRock Hospitality and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.The idea behind DiamondRock Hospitality and HF FOODS GRP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HF FOODS vs. Performance Food Group | HF FOODS vs. Superior Plus Corp | HF FOODS vs. NMI Holdings | HF FOODS vs. Origin Agritech |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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