Correlation Between Gladstone Investment and Ashford Hospitality

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

By analyzing existing cross correlation between Gladstone Investment and Ashford Hospitality Trust, you can compare the effects of market volatilities on Gladstone Investment and Ashford Hospitality 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 Gladstone Investment with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Ashford Hospitality.

Diversification Opportunities for Gladstone Investment and Ashford Hospitality

0.05

Correlation Coefficient

Gladstone Investment  Ashford Hospitality

Significant diversification

The 3 months correlation between Gladstone and Ashford is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Ashford Hospitality go up and down completely randomly.

Pair Corralation between Gladstone Investment and Ashford Hospitality

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.17 times more return on investment than Ashford Hospitality. However, Gladstone Investment is 5.87 times less risky than Ashford Hospitality. It trades about 0.03 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.0 per unit of risk. If you would invest  2,468  in Gladstone Investment on October 22, 2024 and sell it today you would earn a total of  39.00  from holding Gladstone Investment or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Gladstone Investment  vs.  Ashford Hospitality Trust

Gladstone Investment

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Gladstone Investment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Ashford Hospitality Trust

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Ashford Hospitality is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Gladstone Investment and Ashford Hospitality

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

The idea behind Gladstone Investment and Ashford Hospitality Trust 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..