Correlation Between Ashford Hospitality and Ashford Hospitality

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

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

Diversification Opportunities for Ashford Hospitality and Ashford Hospitality

0.79

Correlation Coefficient

Ashford Hospitality  Ashford Hospitality

Poor diversification

The 3 months correlation between Ashford and Ashford is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust 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 Ashford 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 Ashford Hospitality Trust 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 Ashford Hospitality i.e., Ashford Hospitality and Ashford Hospitality go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Ashford Hospitality

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 1.03 times more return on investment than Ashford Hospitality. However, Ashford Hospitality is 1.03 times more volatile than Ashford Hospitality Trust. It trades about 0.08 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.03 per unit of risk. If you would invest  1,173  in Ashford Hospitality Trust on September 1, 2024 and sell it today you would earn a total of  312.00  from holding Ashford Hospitality Trust or generate 26.6% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  Ashford Hospitality Trust

Ashford Hospitality Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ashford Hospitality Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Preferred Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ashford Hospitality and Ashford Hospitality

The main advantage of trading using opposite Ashford Hospitality and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality 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 Ashford Hospitality Trust 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.