Correlation Between Ashford Hospitality and Power REIT
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Power 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 Power 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 Power REIT, you can compare the effects of market volatilities on Ashford Hospitality and Power 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 Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Power REIT.
Diversification Opportunities for Ashford Hospitality and Power REIT
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and Power is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Power REIT go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Power REIT
Assuming the 90 days trading horizon Ashford Hospitality is expected to generate 5.11 times less return on investment than Power REIT. But when comparing it to its historical volatility, Ashford Hospitality Trust is 4.27 times less risky than Power REIT. It trades about 0.06 of its potential returns per unit of risk. Power REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Power REIT on November 9, 2024 and sell it today you would earn a total of 65.00 from holding Power REIT or generate 114.04% 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. Power REIT
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Power REIT |
Ashford Hospitality and Power REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Power REIT
The main advantage of trading using opposite Ashford Hospitality and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Power 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 Power REIT will offset losses from the drop in Power REIT'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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