Correlation Between DiamondRock Hospitality and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Ramsay Health 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 Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Ramsay Health Care, you can compare the effects of market volatilities on DiamondRock Hospitality and Ramsay Health 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 Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Ramsay Health.
Diversification Opportunities for DiamondRock Hospitality and Ramsay Health
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between DiamondRock and Ramsay is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care 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 Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Ramsay Health go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Ramsay Health
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 4.77 times more return on investment than Ramsay Health. However, DiamondRock Hospitality is 4.77 times more volatile than Ramsay Health Care. It trades about 0.09 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.17 per unit of risk. If you would invest 810.00 in DiamondRock Hospitality on August 28, 2024 and sell it today you would earn a total of 75.00 from holding DiamondRock Hospitality or generate 9.26% 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. Ramsay Health Care
Performance |
| Timeline |
| DiamondRock Hospitality |
| Ramsay Health Care |
DiamondRock Hospitality and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Ramsay Health
The main advantage of trading using opposite DiamondRock Hospitality and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.The idea behind DiamondRock Hospitality and Ramsay Health Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ramsay Health vs. Laureate Education | Ramsay Health vs. BLUESCOPE STEEL | Ramsay Health vs. BlueScope Steel Limited | Ramsay Health vs. IDP EDUCATION LTD |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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