Correlation Between Hitachi and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Hitachi and DiamondRock Hospitality 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 Hitachi and DiamondRock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi and DiamondRock Hospitality, you can compare the effects of market volatilities on Hitachi and DiamondRock Hospitality 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 Hitachi with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and DiamondRock Hospitality.
Diversification Opportunities for Hitachi and DiamondRock Hospitality
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and DiamondRock is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Hitachi 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 Hitachi are associated (or correlated) with DiamondRock Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiamondRock Hospitality has no effect on the direction of Hitachi i.e., Hitachi and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Hitachi and DiamondRock Hospitality
Assuming the 90 days trading horizon Hitachi is expected to generate 2.36 times less return on investment than DiamondRock Hospitality. In addition to that, Hitachi is 1.75 times more volatile than DiamondRock Hospitality. It trades about 0.08 of its total potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.35 per unit of volatility. If you would invest 835.00 in DiamondRock Hospitality on September 18, 2024 and sell it today you would earn a total of 85.00 from holding DiamondRock Hospitality or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hitachi vs. DiamondRock Hospitality
Performance |
| Timeline |
| Hitachi |
| DiamondRock Hospitality |
Hitachi and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and DiamondRock Hospitality
The main advantage of trading using opposite Hitachi and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, DiamondRock Hospitality 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 DiamondRock Hospitality will offset losses from the drop in DiamondRock Hospitality's long position.| Hitachi vs. DiamondRock Hospitality | Hitachi vs. CVS Health | Hitachi vs. CHINA TELECOM H | Hitachi vs. FEMALE HEALTH |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |