Correlation Between DiamondRock Hospitality and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Progressive Corp 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 Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Progressive Corp, you can compare the effects of market volatilities on DiamondRock Hospitality and Progressive Corp 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 Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Progressive Corp.
Diversification Opportunities for DiamondRock Hospitality and Progressive Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DiamondRock and Progressive is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp 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 Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Progressive Corp go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Progressive Corp
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 1.09 times more return on investment than Progressive Corp. However, DiamondRock Hospitality is 1.09 times more volatile than Progressive Corp. It trades about 0.2 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.06 per unit of risk. If you would invest 860.00 in DiamondRock Hospitality on September 13, 2024 and sell it today you would earn a total of 55.00 from holding DiamondRock Hospitality or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Progressive Corp
Performance |
| Timeline |
| DiamondRock Hospitality |
| Progressive Corp |
DiamondRock Hospitality and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Progressive Corp
The main advantage of trading using opposite DiamondRock Hospitality and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Progressive Corp 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 Progressive Corp will offset losses from the drop in Progressive Corp's long position.| DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB |
| Progressive Corp vs. Ramsay Health Care | Progressive Corp vs. EHEALTH | Progressive Corp vs. SEKISUI CHEMICAL | Progressive Corp vs. DiamondRock Hospitality |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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