Correlation Between Ashford Hospitality and Alsea SAB

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

Diversification Opportunities for Ashford Hospitality and Alsea SAB

0.37

Correlation Coefficient

Ashford Hospitality  Alsea SAB

Weak diversification

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

Pair Corralation between Ashford Hospitality and Alsea SAB

Considering the 90-day investment horizon Ashford Hospitality Trust is expected to generate 1.36 times more return on investment than Alsea SAB. However, Ashford Hospitality is 1.36 times more volatile than Alsea SAB de. It trades about 0.03 of its potential returns per unit of risk. Alsea SAB de is currently generating about 0.02 per unit of risk. If you would invest  718.00  in Ashford Hospitality Trust on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Ashford Hospitality Trust or generate 1.39% 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.  Alsea SAB de

Ashford Hospitality Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, Ashford Hospitality may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alsea SAB de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alsea SAB de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alsea SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ashford Hospitality and Alsea SAB

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

The idea behind Ashford Hospitality Trust and Alsea SAB de 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.