Correlation Between DiamondRock Hospitality and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and INSURANCE AUST 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 INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and INSURANCE AUST GRP, you can compare the effects of market volatilities on DiamondRock Hospitality and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and INSURANCE AUST.
Diversification Opportunities for DiamondRock Hospitality and INSURANCE AUST
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DiamondRock and INSURANCE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and INSURANCE AUST go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and INSURANCE AUST
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 1.67 times less return on investment than INSURANCE AUST. In addition to that, DiamondRock Hospitality is 2.83 times more volatile than INSURANCE AUST GRP. It trades about 0.03 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.13 per unit of volatility. If you would invest 337.00 in INSURANCE AUST GRP on August 28, 2024 and sell it today you would earn a total of 163.00 from holding INSURANCE AUST GRP or generate 48.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. INSURANCE AUST GRP
Performance |
| Timeline |
| DiamondRock Hospitality |
| INSURANCE AUST GRP |
DiamondRock Hospitality and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and INSURANCE AUST
The main advantage of trading using opposite DiamondRock Hospitality and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| DiamondRock Hospitality vs. BANKINTER ADR 2007 | DiamondRock Hospitality vs. SOFTBANK P ADR | DiamondRock Hospitality vs. ELMOS SEMICONDUCTOR | DiamondRock Hospitality vs. The Hanover Insurance |
| INSURANCE AUST vs. SHIP HEALTHCARE HLDGINC | INSURANCE AUST vs. WillScot Mobile Mini | INSURANCE AUST vs. EPSILON HEALTHCARE LTD | INSURANCE AUST vs. Bumrungrad Hospital Public |
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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