Correlation Between Park Hotels and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both Park Hotels 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 Park Hotels and Diamondrock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Diamondrock Hospitality, you can compare the effects of market volatilities on Park Hotels 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 Park Hotels with a short position of Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Diamondrock Hospitality.
Diversification Opportunities for Park Hotels and Diamondrock Hospitality
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Diamondrock is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Diamondrock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality and Park Hotels 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 Park Hotels Resorts 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 Park Hotels i.e., Park Hotels and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between Park Hotels and Diamondrock Hospitality
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.98 times more return on investment than Diamondrock Hospitality. However, Park Hotels Resorts is 1.02 times less risky than Diamondrock Hospitality. It trades about 0.2 of its potential returns per unit of risk. Diamondrock Hospitality is currently generating about 0.08 per unit of risk. If you would invest 1,396 in Park Hotels Resorts on August 27, 2024 and sell it today you would earn a total of 109.00 from holding Park Hotels Resorts or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Diamondrock Hospitality
Performance |
| Timeline |
| Park Hotels Resorts |
| Diamondrock Hospitality |
Park Hotels and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Diamondrock Hospitality
The main advantage of trading using opposite Park Hotels and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels 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.| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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