Correlation Between Ashford Hospitality and Highland Funds

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

Diversification Opportunities for Ashford Hospitality and Highland Funds

-0.62

Correlation Coefficient

Ashford Hospitality  Highland Funds

Excellent diversification

The 3 months correlation between Ashford and Highland is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Highland Funds I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Funds I 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 Highland Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Funds I has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Highland Funds go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Highland Funds

Considering the 90-day investment horizon Ashford Hospitality Trust is expected to under-perform the Highland Funds. In addition to that, Ashford Hospitality is 5.62 times more volatile than Highland Funds I. It trades about -0.04 of its total potential returns per unit of risk. Highland Funds I is currently generating about 0.0 per unit of volatility. If you would invest  1,666  in Highland Funds I on September 20, 2024 and sell it today you would lose (10.00) from holding Highland Funds I or give up 0.6% of portfolio value over 90 days.

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

Ashford Hospitality Trust  vs.  Highland Funds I

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. In spite of latest unfluctuating performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Highland Funds I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Funds I 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ashford Hospitality and Highland Funds

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

The idea behind Ashford Hospitality Trust and Highland Funds I 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.