Correlation Between DiamondRock Hospitality and EHEALTH
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and EHEALTH 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 EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and EHEALTH, you can compare the effects of market volatilities on DiamondRock Hospitality and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and EHEALTH.
Diversification Opportunities for DiamondRock Hospitality and EHEALTH
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DiamondRock and EHEALTH is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and EHEALTH go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and EHEALTH
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 0.73 times more return on investment than EHEALTH. However, DiamondRock Hospitality is 1.37 times less risky than EHEALTH. It trades about 0.03 of its potential returns per unit of risk. EHEALTH is currently generating about -0.01 per unit of risk. If you would invest 713.00 in DiamondRock Hospitality on August 24, 2024 and sell it today you would earn a total of 152.00 from holding DiamondRock Hospitality or generate 21.32% 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. EHEALTH
Performance |
| Timeline |
| DiamondRock Hospitality |
| EHEALTH |
DiamondRock Hospitality and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and EHEALTH
The main advantage of trading using opposite DiamondRock Hospitality and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| DiamondRock Hospitality vs. FOUR NERS PROPERTY | DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Sotherly Hotels |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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