Correlation Between Braemar Hotel and AstroNova

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

By analyzing existing cross correlation between Braemar Hotel Resorts and AstroNova, you can compare the effects of market volatilities on Braemar Hotel and AstroNova 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 Braemar Hotel with a short position of AstroNova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotel and AstroNova.

Diversification Opportunities for Braemar Hotel and AstroNova

0.27

Correlation Coefficient

Braemar Hotel  AstroNova

Modest diversification

The 3 months correlation between Braemar and AstroNova is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotel Resorts and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova and Braemar Hotel 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 Braemar Hotel Resorts are associated (or correlated) with AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Braemar Hotel i.e., Braemar Hotel and AstroNova go up and down completely randomly.

Pair Corralation between Braemar Hotel and AstroNova

Considering the 90-day investment horizon Braemar Hotel Resorts is expected to generate 1.2 times more return on investment than AstroNova. However, Braemar Hotel is 1.2 times more volatile than AstroNova. It trades about 0.14 of its potential returns per unit of risk. AstroNova is currently generating about 0.03 per unit of risk. If you would invest  286.00  in Braemar Hotel Resorts on September 5, 2024 and sell it today you would earn a total of  81.00  from holding Braemar Hotel Resorts or generate 28.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Braemar Hotel Resorts  vs.  AstroNova

Braemar Hotel Resorts

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Braemar Hotel Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Braemar Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

AstroNova

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AstroNova are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AstroNova is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Braemar Hotel and AstroNova

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

The idea behind Braemar Hotel Resorts and AstroNova 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.