Correlation Between Ashford Hospitality and Chatham Lodging
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Chatham Lodging 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 Chatham Lodging 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 Chatham Lodging Trust, you can compare the effects of market volatilities on Ashford Hospitality and Chatham Lodging 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 Chatham Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Chatham Lodging.
Diversification Opportunities for Ashford Hospitality and Chatham Lodging
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and Chatham is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Chatham Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Lodging Trust 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 Chatham Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Lodging Trust has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Chatham Lodging go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Chatham Lodging
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Chatham Lodging. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ashford Hospitality Trust is 1.02 times less risky than Chatham Lodging. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Chatham Lodging Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 830.00 in Chatham Lodging Trust on August 31, 2024 and sell it today you would earn a total of 91.00 from holding Chatham Lodging Trust or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Chatham Lodging Trust
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Chatham Lodging Trust |
Ashford Hospitality and Chatham Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Chatham Lodging
The main advantage of trading using opposite Ashford Hospitality and Chatham Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Chatham Lodging 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 Chatham Lodging will offset losses from the drop in Chatham Lodging's long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Summit Hotel Properties |
| Chatham Lodging vs. Sunstone Hotel Investors | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Ryman Hospitality Properties | Chatham Lodging vs. Xenia Hotels Resorts |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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