Correlation Between Ambase Corp and Ashford Hospitality

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

By analyzing existing cross correlation between Ambase Corp and Ashford Hospitality Trust, you can compare the effects of market volatilities on Ambase Corp and Ashford 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 Ambase Corp with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambase Corp and Ashford Hospitality.

Diversification Opportunities for Ambase Corp and Ashford Hospitality

-0.56

Correlation Coefficient

Ambase Corp  Ashford Hospitality

Excellent diversification

The 3 months correlation between Ambase and Ashford is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ambase Corp and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Ambase Corp 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 Ambase Corp are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Ambase Corp i.e., Ambase Corp and Ashford Hospitality go up and down completely randomly.

Pair Corralation between Ambase Corp and Ashford Hospitality

Given the investment horizon of 90 days Ambase Corp is expected to generate 3.16 times less return on investment than Ashford Hospitality. In addition to that, Ambase Corp is 1.25 times more volatile than Ashford Hospitality Trust. It trades about 0.03 of its total potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.13 per unit of volatility. If you would invest  1,303  in Ashford Hospitality Trust on December 29, 2024 and sell it today you would earn a total of  271.00  from holding Ashford Hospitality Trust or generate 20.8% return on investment over 90 days.

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

Ambase Corp  vs.  Ashford Hospitality Trust

Ambase Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambase Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Ambase Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ashford Hospitality Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Ashford Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambase Corp and Ashford Hospitality

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

The idea behind Ambase Corp and Ashford Hospitality Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.