Correlation Between Diamondrock Hospitality and Heineken
Can any of the company-specific risk be diversified away by investing in both Diamondrock Hospitality and Heineken 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 Heineken 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 Heineken NV, you can compare the effects of market volatilities on Diamondrock Hospitality and Heineken 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 Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondrock Hospitality and Heineken.
Diversification Opportunities for Diamondrock Hospitality and Heineken
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamondrock and Heineken is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality Co and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV 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 Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of Diamondrock Hospitality i.e., Diamondrock Hospitality and Heineken go up and down completely randomly.
Pair Corralation between Diamondrock Hospitality and Heineken
Assuming the 90 days trading horizon Diamondrock Hospitality Co is expected to generate 1.28 times more return on investment than Heineken. However, Diamondrock Hospitality is 1.28 times more volatile than Heineken NV. It trades about 0.01 of its potential returns per unit of risk. Heineken NV is currently generating about -0.01 per unit of risk. If you would invest 781.00 in Diamondrock Hospitality Co on November 19, 2024 and sell it today you would earn a total of 29.00 from holding Diamondrock Hospitality Co or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondrock Hospitality Co vs. Heineken NV
Performance |
| Timeline |
| Diamondrock Hospitality |
| Heineken NV |
Diamondrock Hospitality and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondrock Hospitality and Heineken
The main advantage of trading using opposite Diamondrock Hospitality and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Diamondrock Hospitality vs. Apple Inc | Diamondrock Hospitality vs. Apple Inc | Diamondrock Hospitality vs. Apple Inc | Diamondrock Hospitality vs. Apple Inc |
| Heineken vs. Flutter Entertainment PLC | Heineken vs. Ribbon Communications | Heineken vs. Iridium Communications | Heineken vs. PARKEN Sport Entertainment |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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