Correlation Between Ashford Hospitality and Crombie Real

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

Diversification Opportunities for Ashford Hospitality and Crombie Real

0.69

Correlation Coefficient

Ashford Hospitality  Crombie Real

Poor diversification

The 3 months correlation between Ashford and Crombie is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate 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 Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Crombie Real go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Crombie Real

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.31 times more return on investment than Crombie Real. However, Ashford Hospitality is 2.31 times more volatile than Crombie Real Estate. It trades about 0.02 of its potential returns per unit of risk. Crombie Real Estate is currently generating about 0.02 per unit of risk. If you would invest  1,382  in Ashford Hospitality Trust on September 14, 2024 and sell it today you would earn a total of  28.00  from holding Ashford Hospitality Trust or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.86%
Values	Daily Returns

Ashford Hospitality Trust  vs.  Crombie Real Estate

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ashford Hospitality and Crombie Real

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

The idea behind Ashford Hospitality Trust and Crombie Real Estate 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.