Correlation Between Grande Hospitality and DTC Industries

Can any of the company-specific risk be diversified away by investing in both Grande Hospitality and DTC Industries 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 Grande Hospitality and DTC Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grande Hospitality Real and DTC Industries Public, you can compare the effects of market volatilities on Grande Hospitality and DTC Industries 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 Grande Hospitality with a short position of DTC Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Hospitality and DTC Industries.

Diversification Opportunities for Grande Hospitality and DTC Industries

0.32

Correlation Coefficient

Grande Hospitality  DTC Industries

Weak diversification

The 3 months correlation between Grande and DTC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grande Hospitality Real and DTC Industries Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTC Industries Public and Grande 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 Grande Hospitality Real are associated (or correlated) with DTC Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTC Industries Public has no effect on the direction of Grande Hospitality i.e., Grande Hospitality and DTC Industries go up and down completely randomly.

Pair Corralation between Grande Hospitality and DTC Industries

Assuming the 90 days trading horizon Grande Hospitality Real is expected to under-perform the DTC Industries. But the stock apears to be less risky and, when comparing its historical volatility, Grande Hospitality Real is 7.91 times less risky than DTC Industries. The stock trades about -0.06 of its potential returns per unit of risk. The DTC Industries Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,225  in DTC Industries Public on October 10, 2024 and sell it today you would earn a total of  525.00  from holding DTC Industries Public or generate 16.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grande Hospitality Real  vs.  DTC Industries Public

Grande Hospitality Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Hospitality Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grande Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

DTC Industries Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DTC Industries Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, DTC Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Hospitality and DTC Industries

The main advantage of trading using opposite Grande Hospitality and DTC Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Hospitality position performs unexpectedly, DTC Industries 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 DTC Industries will offset losses from the drop in DTC Industries' long position.

The idea behind Grande Hospitality Real and DTC Industries Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..