Correlation Between DiamondRock Hospitality and Lion One
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Lion One Metals, you can compare the effects of market volatilities on DiamondRock Hospitality and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Lion One.
Diversification Opportunities for DiamondRock Hospitality and Lion One
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between DiamondRock and Lion is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Lion One go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Lion One
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 0.79 times more return on investment than Lion One. However, DiamondRock Hospitality is 1.26 times less risky than Lion One. It trades about 0.04 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest 769.00 in DiamondRock Hospitality on September 1, 2024 and sell it today you would earn a total of 86.00 from holding DiamondRock Hospitality or generate 11.18% 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. Lion One Metals
Performance |
| Timeline |
| DiamondRock Hospitality |
| Lion One Metals |
DiamondRock Hospitality and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Lion One
The main advantage of trading using opposite DiamondRock Hospitality and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. NMI Holdings | DiamondRock Hospitality vs. Origin Agritech | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB |
| Lion One vs. NIPPON STEEL SPADR | Lion One vs. United States Steel | Lion One vs. Nippon Steel | Lion One vs. Singapore Telecommunications Limited |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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