Correlation Between National Retail and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and Diamondrock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Diamondrock Hospitality, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Diamondrock Hospitality.
Diversification Opportunities for National Retail and Diamondrock Hospitality
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Diamondrock is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Diamondrock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between National Retail and Diamondrock Hospitality
Considering the 90-day investment horizon National Retail Properties is expected to under-perform the Diamondrock Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 1.21 times less risky than Diamondrock Hospitality. The stock trades about -0.15 of its potential returns per unit of risk. The Diamondrock Hospitality is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 889.00 in Diamondrock Hospitality on August 27, 2024 and sell it today you would earn a total of 46.00 from holding Diamondrock Hospitality or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Diamondrock Hospitality
Performance |
| Timeline |
| National Retail Prop |
| Diamondrock Hospitality |
National Retail and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Diamondrock Hospitality
The main advantage of trading using opposite National Retail and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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.| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone REIT |
| Diamondrock Hospitality vs. Summit Hotel Properties | Diamondrock Hospitality vs. RLJ Lodging Trust | Diamondrock Hospitality vs. Pebblebrook Hotel Trust | Diamondrock Hospitality vs. Sunstone Hotel Investors |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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