Correlation Between Ashford Hospitality and Alpine Realty

Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Alpine Realty 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 Alpine Realty 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 Alpine Realty Income, you can compare the effects of market volatilities on Ashford Hospitality and Alpine Realty 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 Alpine Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Alpine Realty.

Diversification Opportunities for Ashford Hospitality and Alpine Realty

-0.43

Correlation Coefficient

Ashford Hospitality  Alpine Realty

Very good diversification

The 3 months correlation between Ashford and Alpine is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Alpine Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Realty Income 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 Alpine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Realty Income has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Alpine Realty go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Alpine Realty

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Alpine Realty. In addition to that, Ashford Hospitality is 3.29 times more volatile than Alpine Realty Income. It trades about -0.07 of its total potential returns per unit of risk. Alpine Realty Income is currently generating about 0.11 per unit of volatility. If you would invest  1,200  in Alpine Realty Income on September 1, 2024 and sell it today you would earn a total of  75.00  from holding Alpine Realty Income or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ashford Hospitality Trust  vs.  Alpine Realty Income

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.

Alpine Realty Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Realty Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Alpine Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ashford Hospitality and Alpine Realty

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

The idea behind Ashford Hospitality Trust and Alpine Realty Income 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.