Correlation Between Ashford Hospitality and Rafael Holdings

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

Diversification Opportunities for Ashford Hospitality and Rafael Holdings

0.23

Correlation Coefficient

Ashford Hospitality  Rafael Holdings

Modest diversification

The 3 months correlation between Ashford and Rafael is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Rafael Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Holdings Class 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 Rafael Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Holdings Class has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Rafael Holdings go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Rafael Holdings

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 0.76 times more return on investment than Rafael Holdings. However, Ashford Hospitality Trust is 1.32 times less risky than Rafael Holdings. It trades about 0.15 of its potential returns per unit of risk. Rafael Holdings Class is currently generating about 0.06 per unit of risk. If you would invest  1,274  in Ashford Hospitality Trust on December 29, 2024 and sell it today you would earn a total of  290.00  from holding Ashford Hospitality Trust or generate 22.76% 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.  Rafael Holdings Class

Ashford Hospitality Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Ashford Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

Rafael Holdings Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Holdings Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rafael Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashford Hospitality and Rafael Holdings

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

The idea behind Ashford Hospitality Trust and Rafael Holdings Class 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.