Correlation Between ASHFORD HOSPITTRUST and Hercules Capital

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

Diversification Opportunities for ASHFORD HOSPITTRUST and Hercules Capital

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ASHFORD and Hercules is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ASHFORD HOSPITTRUST and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of ASHFORD HOSPITTRUST i.e., ASHFORD HOSPITTRUST and Hercules Capital go up and down completely randomly.

Pair Corralation between ASHFORD HOSPITTRUST and Hercules Capital

Assuming the 90 days horizon ASHFORD HOSPITTRUST is expected to under-perform the Hercules Capital. In addition to that, ASHFORD HOSPITTRUST is 1.58 times more volatile than Hercules Capital. It trades about -0.16 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.11 per unit of volatility. If you would invest  1,757  in Hercules Capital on October 4, 2024 and sell it today you would earn a total of  155.00  from holding Hercules Capital or generate 8.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy96.67%
ValuesDaily Returns

ASHFORD HOSPITTRUST  vs.  Hercules Capital

 Performance 
       Timeline  
ASHFORD HOSPITTRUST 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ASHFORD HOSPITTRUST has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Hercules Capital 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ASHFORD HOSPITTRUST and Hercules Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ASHFORD HOSPITTRUST and Hercules Capital

The main advantage of trading using opposite ASHFORD HOSPITTRUST and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASHFORD HOSPITTRUST position performs unexpectedly, Hercules Capital 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.
The idea behind ASHFORD HOSPITTRUST and Hercules Capital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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