Correlation Between Hitachi Zosen and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Hitachi Zosen 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 Zosen 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 Zosen and DiamondRock Hospitality, you can compare the effects of market volatilities on Hitachi Zosen 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 Zosen with a short position of DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Zosen and DiamondRock Hospitality.
Diversification Opportunities for Hitachi Zosen and DiamondRock Hospitality
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hitachi and DiamondRock is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Zosen and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality and Hitachi Zosen 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 Zosen 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 Zosen i.e., Hitachi Zosen and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Hitachi Zosen and DiamondRock Hospitality
Assuming the 90 days horizon Hitachi Zosen is expected to generate 7.43 times less return on investment than DiamondRock Hospitality. But when comparing it to its historical volatility, Hitachi Zosen is 2.52 times less risky than DiamondRock Hospitality. It trades about 0.02 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 774.00 in DiamondRock Hospitality on October 9, 2024 and sell it today you would earn a total of 81.00 from holding DiamondRock Hospitality or generate 10.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hitachi Zosen vs. DiamondRock Hospitality
Performance |
Timeline |
Hitachi Zosen |
DiamondRock Hospitality |
Hitachi Zosen and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hitachi Zosen and DiamondRock Hospitality
The main advantage of trading using opposite Hitachi Zosen and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Zosen 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 Zosen vs. T MOBILE US | Hitachi Zosen vs. Shenandoah Telecommunications | Hitachi Zosen vs. TELECOM ITALRISP ADR10 | Hitachi Zosen vs. Highlight Communications AG |
DiamondRock Hospitality vs. VULCAN MATERIALS | DiamondRock Hospitality vs. Plastic Omnium | DiamondRock Hospitality vs. The Yokohama Rubber | DiamondRock Hospitality vs. DAIRY FARM INTL |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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