Correlation Between CorePoint Lodging and Diamondrock Hospitality

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Can any of the company-specific risk be diversified away by investing in both CorePoint Lodging 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 CorePoint Lodging and Diamondrock Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CorePoint Lodging and Diamondrock Hospitality, you can compare the effects of market volatilities on CorePoint Lodging 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 CorePoint Lodging with a short position of Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of CorePoint Lodging and Diamondrock Hospitality.

Diversification Opportunities for CorePoint Lodging and Diamondrock Hospitality

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CorePoint and Diamondrock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CorePoint Lodging and Diamondrock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality and CorePoint Lodging 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 CorePoint Lodging 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 CorePoint Lodging i.e., CorePoint Lodging and Diamondrock Hospitality go up and down completely randomly.

Pair Corralation between CorePoint Lodging and Diamondrock Hospitality

If you would invest  817.00  in Diamondrock Hospitality on December 29, 2023 and sell it today you would earn a total of  145.00  from holding Diamondrock Hospitality or generate 17.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

CorePoint Lodging  vs.  Diamondrock Hospitality

 Performance 
       Timeline  
CorePoint Lodging 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days CorePoint Lodging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CorePoint Lodging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Diamondrock Hospitality 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Diamondrock Hospitality are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Diamondrock Hospitality is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CorePoint Lodging and Diamondrock Hospitality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CorePoint Lodging and Diamondrock Hospitality

The main advantage of trading using opposite CorePoint Lodging and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CorePoint Lodging 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.
The idea behind CorePoint Lodging and Diamondrock Hospitality 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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