Correlation Between Ashford Hospitality and NexPoint Diversified
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and NexPoint Diversified 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 NexPoint Diversified 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 NexPoint Diversified Real, you can compare the effects of market volatilities on Ashford Hospitality and NexPoint Diversified 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 NexPoint Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and NexPoint Diversified.
Diversification Opportunities for Ashford Hospitality and NexPoint Diversified
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashford and NexPoint is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and NexPoint Diversified Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Diversified Real 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 NexPoint Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Diversified Real has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and NexPoint Diversified go up and down completely randomly.
Pair Corralation between Ashford Hospitality and NexPoint Diversified
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.15 times more return on investment than NexPoint Diversified. However, Ashford Hospitality is 2.15 times more volatile than NexPoint Diversified Real. It trades about 0.02 of its potential returns per unit of risk. NexPoint Diversified Real is currently generating about 0.03 per unit of risk. If you would invest 1,382 in Ashford Hospitality Trust on August 23, 2024 and sell it today you would earn a total of 166.00 from holding Ashford Hospitality Trust or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. NexPoint Diversified Real
Performance |
| Timeline |
| Ashford Hospitality Trust |
| NexPoint Diversified Real |
Ashford Hospitality and NexPoint Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and NexPoint Diversified
The main advantage of trading using opposite Ashford Hospitality and NexPoint Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, NexPoint Diversified 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 NexPoint Diversified will offset losses from the drop in NexPoint Diversified's long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts |
| NexPoint Diversified vs. NexPoint Strategic Opportunities | NexPoint Diversified vs. Prospect Capital | NexPoint Diversified vs. Ready Capital | NexPoint Diversified vs. SiriusPoint |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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