Correlation Between J+J SNACK and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both J+J SNACK 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 J+J SNACK and Diamondrock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and Diamondrock Hospitality Co, you can compare the effects of market volatilities on J+J SNACK 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 J+J SNACK with a short position of Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Diamondrock Hospitality.
Diversification Opportunities for J+J SNACK and Diamondrock Hospitality
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between J+J and Diamondrock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Diamondrock Hospitality Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality and J+J SNACK 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 JJ SNACK FOODS 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 J+J SNACK i.e., J+J SNACK and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between J+J SNACK and Diamondrock Hospitality
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.95 times more return on investment than Diamondrock Hospitality. However, JJ SNACK FOODS is 1.05 times less risky than Diamondrock Hospitality. It trades about 0.03 of its potential returns per unit of risk. Diamondrock Hospitality Co is currently generating about 0.01 per unit of risk. If you would invest 14,768 in JJ SNACK FOODS on August 28, 2024 and sell it today you would earn a total of 1,232 from holding JJ SNACK FOODS or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. Diamondrock Hospitality Co
Performance |
| Timeline |
| JJ SNACK FOODS |
| Diamondrock Hospitality |
J+J SNACK and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and Diamondrock Hospitality
The main advantage of trading using opposite J+J SNACK and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK 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.| J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. NMI Holdings | J+J SNACK vs. Origin Agritech | J+J SNACK vs. SIVERS SEMICONDUCTORS AB |
| Diamondrock Hospitality vs. PennantPark Investment | Diamondrock Hospitality vs. Evolution Mining Limited | Diamondrock Hospitality vs. New Residential Investment | Diamondrock Hospitality vs. KENNAMETAL 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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