Correlation Between DiamondRock Hospitality and AGF Management
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and AGF Management 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 AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and AGF Management Limited, you can compare the effects of market volatilities on DiamondRock Hospitality and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and AGF Management.
Diversification Opportunities for DiamondRock Hospitality and AGF Management
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DiamondRock and AGF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and AGF Management go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and AGF Management
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 1.85 times less return on investment than AGF Management. In addition to that, DiamondRock Hospitality is 1.71 times more volatile than AGF Management Limited. It trades about 0.04 of its total potential returns per unit of risk. AGF Management Limited is currently generating about 0.13 per unit of volatility. If you would invest 530.00 in AGF Management Limited on August 31, 2024 and sell it today you would earn a total of 205.00 from holding AGF Management Limited or generate 38.68% 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. AGF Management Limited
Performance |
| Timeline |
| DiamondRock Hospitality |
| AGF Management |
DiamondRock Hospitality and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and AGF Management
The main advantage of trading using opposite DiamondRock Hospitality and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. NMI Holdings | DiamondRock Hospitality vs. Origin Agritech |
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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.
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