Correlation Between Ashford Hospitality and Carlyle

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

Diversification Opportunities for Ashford Hospitality and Carlyle

-0.25

Correlation Coefficient

Ashford Hospitality  Carlyle

Very good diversification

The 3 months correlation between Ashford and Carlyle is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Carlyle go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Carlyle

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 1.76 times more return on investment than Carlyle. However, Ashford Hospitality is 1.76 times more volatile than The Carlyle Group. It trades about 0.18 of its potential returns per unit of risk. The Carlyle Group is currently generating about -0.01 per unit of risk. If you would invest  1,303  in Ashford Hospitality Trust on December 27, 2024 and sell it today you would earn a total of  260.00  from holding Ashford Hospitality Trust or generate 19.95% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  The Carlyle Group

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 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Ashford Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Carlyle is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ashford Hospitality and Carlyle

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

The idea behind Ashford Hospitality Trust and The Carlyle Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.