Correlation Between DiamondRock Hospitality and H FARM
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and H FARM 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 H FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and H FARM SPA, you can compare the effects of market volatilities on DiamondRock Hospitality and H FARM 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 H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and H FARM.
Diversification Opportunities for DiamondRock Hospitality and H FARM
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DiamondRock and 5JQ is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and H FARM go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and H FARM
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 6.04 times less return on investment than H FARM. But when comparing it to its historical volatility, DiamondRock Hospitality is 3.68 times less risky than H FARM. It trades about 0.06 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 11.00 in H FARM SPA on September 23, 2024 and sell it today you would earn a total of 1.00 from holding H FARM SPA or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. H FARM SPA
Performance |
| Timeline |
| DiamondRock Hospitality |
| H FARM SPA |
DiamondRock Hospitality and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and H FARM
The main advantage of trading using opposite DiamondRock Hospitality and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| DiamondRock Hospitality vs. EBRO FOODS | DiamondRock Hospitality vs. alstria office REIT AG | DiamondRock Hospitality vs. Thai Beverage Public | DiamondRock Hospitality vs. CENTURIA OFFICE REIT |
| H FARM vs. Blackstone Group | H FARM vs. The Bank of | H FARM vs. Ameriprise Financial | H FARM vs. State Street |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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