Correlation Between Ashford Hospitality and CareTrust REIT
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and CareTrust REIT 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 CareTrust REIT 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 CareTrust REIT, you can compare the effects of market volatilities on Ashford Hospitality and CareTrust REIT 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 CareTrust REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and CareTrust REIT.
Diversification Opportunities for Ashford Hospitality and CareTrust REIT
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and CareTrust is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT 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 CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and CareTrust REIT go up and down completely randomly.
Pair Corralation between Ashford Hospitality and CareTrust REIT
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 1.41 times more return on investment than CareTrust REIT. However, Ashford Hospitality is 1.41 times more volatile than CareTrust REIT. It trades about 0.03 of its potential returns per unit of risk. CareTrust REIT is currently generating about -0.09 per unit of risk. If you would invest 1,511 in Ashford Hospitality Trust on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Ashford Hospitality Trust or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. CareTrust REIT
Performance |
| Timeline |
| Ashford Hospitality Trust |
| CareTrust REIT |
Ashford Hospitality and CareTrust REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and CareTrust REIT
The main advantage of trading using opposite Ashford Hospitality and CareTrust REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, CareTrust REIT 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 CareTrust REIT will offset losses from the drop in CareTrust REIT's long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Aspen Digital |
| CareTrust REIT vs. Global Medical REIT | CareTrust REIT vs. Universal Health Realty | CareTrust REIT vs. Healthpeak Properties | CareTrust REIT vs. Healthcare Realty Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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