Correlation Between Diamondrock Hospitality and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Diamondrock Hospitality and Globex Mining 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 Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondrock Hospitality Co and Globex Mining Enterprises, you can compare the effects of market volatilities on Diamondrock Hospitality and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondrock Hospitality and Globex Mining.
Diversification Opportunities for Diamondrock Hospitality and Globex Mining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamondrock and Globex is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality Co and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Co are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Diamondrock Hospitality i.e., Diamondrock Hospitality and Globex Mining go up and down completely randomly.
Pair Corralation between Diamondrock Hospitality and Globex Mining
Assuming the 90 days trading horizon Diamondrock Hospitality is expected to generate 1.63 times less return on investment than Globex Mining. But when comparing it to its historical volatility, Diamondrock Hospitality Co is 1.34 times less risky than Globex Mining. It trades about 0.17 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Globex Mining Enterprises on September 12, 2024 and sell it today you would earn a total of 20.00 from holding Globex Mining Enterprises or generate 37.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondrock Hospitality Co vs. Globex Mining Enterprises
Performance |
| Timeline |
| Diamondrock Hospitality |
| Globex Mining Enterprises |
Diamondrock Hospitality and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondrock Hospitality and Globex Mining
The main advantage of trading using opposite Diamondrock Hospitality and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Diamondrock Hospitality vs. Brockhaus Capital Management | Diamondrock Hospitality vs. LANDSEA GREEN MANAGEMENT | Diamondrock Hospitality vs. Khiron Life Sciences | Diamondrock Hospitality vs. BLUESCOPE STEEL |
| Globex Mining vs. LPKF Laser Electronics | Globex Mining vs. Methode Electronics | Globex Mining vs. BRIT AMER TOBACCO | Globex Mining vs. Japan Tobacco |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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