Correlation Between DiamondRock Hospitality and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Singapore Airlines Limited, you can compare the effects of market volatilities on DiamondRock Hospitality and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Singapore Airlines.
Diversification Opportunities for DiamondRock Hospitality and Singapore Airlines
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DiamondRock and Singapore is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Singapore Airlines go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Singapore Airlines
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 2.44 times more return on investment than Singapore Airlines. However, DiamondRock Hospitality is 2.44 times more volatile than Singapore Airlines Limited. It trades about 0.04 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.04 per unit of risk. If you would invest 704.00 in DiamondRock Hospitality on September 19, 2024 and sell it today you would earn a total of 216.00 from holding DiamondRock Hospitality or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Singapore Airlines Limited
Performance |
| Timeline |
| DiamondRock Hospitality |
| Singapore Airlines |
DiamondRock Hospitality and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Singapore Airlines
The main advantage of trading using opposite DiamondRock Hospitality and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. SIVERS SEMICONDUCTORS AB | DiamondRock Hospitality vs. Norsk Hydro ASA |
| Singapore Airlines vs. Chuangs China Investments | Singapore Airlines vs. DiamondRock Hospitality | Singapore Airlines vs. Natural Health Trends | Singapore Airlines vs. YOOMA WELLNESS INC |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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