Correlation Between Alstria Office and BRAEMAR HOTELS

Can any of the company-specific risk be diversified away by investing in both Alstria Office and BRAEMAR HOTELS 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 Alstria Office and BRAEMAR HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and BRAEMAR HOTELS RES, you can compare the effects of market volatilities on Alstria Office and BRAEMAR HOTELS 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 Alstria Office with a short position of BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and BRAEMAR HOTELS.

Diversification Opportunities for Alstria Office and BRAEMAR HOTELS

0.65

Correlation Coefficient

Alstria Office  BRAEMAR HOTELS

Poor diversification

The 3 months correlation between Alstria and BRAEMAR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and Alstria Office 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 alstria office REIT AG are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Alstria Office i.e., Alstria Office and BRAEMAR HOTELS go up and down completely randomly.

Pair Corralation between Alstria Office and BRAEMAR HOTELS

Assuming the 90 days horizon alstria office REIT AG is expected to generate 0.64 times more return on investment than BRAEMAR HOTELS. However, alstria office REIT AG is 1.55 times less risky than BRAEMAR HOTELS. It trades about 0.02 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about 0.0 per unit of risk. If you would invest  513.00  in alstria office REIT AG on October 23, 2024 and sell it today you would earn a total of  21.00  from holding alstria office REIT AG or generate 4.09% return on investment over 90 days.

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

alstria office REIT AG  vs.  BRAEMAR HOTELS RES

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BRAEMAR HOTELS RES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRAEMAR HOTELS RES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BRAEMAR HOTELS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alstria Office and BRAEMAR HOTELS

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

The idea behind alstria office REIT AG and BRAEMAR HOTELS RES 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.