Correlation Between Ashford Hospitality and Mid America
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Mid America 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 Mid America 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 Mid America Apartment Communities, you can compare the effects of market volatilities on Ashford Hospitality and Mid America 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 Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Mid America.
Diversification Opportunities for Ashford Hospitality and Mid America
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashford and Mid is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Mid America go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Mid America
Assuming the 90 days trading horizon Ashford Hospitality is expected to generate 1.07 times less return on investment than Mid America. In addition to that, Ashford Hospitality is 1.46 times more volatile than Mid America Apartment Communities. It trades about 0.02 of its total potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.03 per unit of volatility. If you would invest 4,763 in Mid America Apartment Communities on August 27, 2024 and sell it today you would earn a total of 1,085 from holding Mid America Apartment Communities or generate 22.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.36% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Mid America Apartment Communit
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Mid America Apartment |
Ashford Hospitality and Mid America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Mid America
The main advantage of trading using opposite Ashford Hospitality and Mid America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Mid America 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 Mid America will offset losses from the drop in Mid America'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 |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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