Correlation Between DiamondRock Hospitality and Hitachi
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Hitachi 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 Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Hitachi, you can compare the effects of market volatilities on DiamondRock Hospitality and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Hitachi.
Diversification Opportunities for DiamondRock Hospitality and Hitachi
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DiamondRock and Hitachi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Hitachi go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Hitachi
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 2.06 times more return on investment than Hitachi. However, DiamondRock Hospitality is 2.06 times more volatile than Hitachi. It trades about 0.07 of its potential returns per unit of risk. Hitachi is currently generating about 0.05 per unit of risk. If you would invest 807.00 in DiamondRock Hospitality on September 19, 2024 and sell it today you would earn a total of 113.00 from holding DiamondRock Hospitality or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Hitachi
Performance |
| Timeline |
| DiamondRock Hospitality |
| Hitachi |
DiamondRock Hospitality and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Hitachi
The main advantage of trading using opposite DiamondRock Hospitality and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB | DiamondRock Hospitality vs. Norsk Hydro ASA |
| Hitachi vs. Haverty Furniture Companies | Hitachi vs. American Homes 4 | Hitachi vs. Autohome ADR | Hitachi vs. G III Apparel Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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