Correlation Between American Hotel and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both American Hotel 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 American Hotel and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Ashford Hospitality Trust, you can compare the effects of market volatilities on American Hotel 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 American Hotel with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Ashford Hospitality.
Diversification Opportunities for American Hotel and Ashford Hospitality
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Ashford is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income 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 American 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 American Hotel Income 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 American Hotel i.e., American Hotel and Ashford Hospitality go up and down completely randomly.
Pair Corralation between American Hotel and Ashford Hospitality
Assuming the 90 days horizon American Hotel Income is expected to under-perform the Ashford Hospitality. In addition to that, American Hotel is 1.37 times more volatile than Ashford Hospitality Trust. It trades about -0.31 of its total potential returns per unit of risk. Ashford Hospitality Trust is currently generating about -0.03 per unit of volatility. If you would invest 1,453 in Ashford Hospitality Trust on September 3, 2024 and sell it today you would lose (32.00) from holding Ashford Hospitality Trust or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Ashford Hospitality Trust
Performance |
| Timeline |
| American Hotel Income |
| Ashford Hospitality Trust |
American Hotel and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Ashford Hospitality
The main advantage of trading using opposite American Hotel and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel 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.| American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust |
| Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Aspen Digital |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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