Correlation Between Ashford Hospitality and Pacific Gas

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

Diversification Opportunities for Ashford Hospitality and Pacific Gas

0.37

Correlation Coefficient

Ashford Hospitality  Pacific Gas

Weak diversification

The 3 months correlation between Ashford and Pacific is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Pacific Gas go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Pacific Gas

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.4 times more return on investment than Pacific Gas. However, Ashford Hospitality is 2.4 times more volatile than Pacific Gas and. It trades about 0.28 of its potential returns per unit of risk. Pacific Gas and is currently generating about -0.17 per unit of risk. If you would invest  1,256  in Ashford Hospitality Trust on October 23, 2024 and sell it today you would earn a total of  189.00  from holding Ashford Hospitality Trust or generate 15.05% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  Pacific Gas and

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 nearly stable basic indicators, Ashford Hospitality is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pacific Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Gas and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ashford Hospitality and Pacific Gas

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

The idea behind Ashford Hospitality Trust and Pacific Gas and 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 Stocks Directory module to find actively traded stocks across global markets.