Correlation Between Ashford Hospitality and First Industrial
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and First Industrial 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 First Industrial 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 First Industrial Realty, you can compare the effects of market volatilities on Ashford Hospitality and First Industrial 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 First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and First Industrial.
Diversification Opportunities for Ashford Hospitality and First Industrial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ashford and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty 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 First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and First Industrial go up and down completely randomly.
Pair Corralation between Ashford Hospitality and First Industrial
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.07 times more return on investment than First Industrial. However, Ashford Hospitality is 2.07 times more volatile than First Industrial Realty. It trades about 0.05 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.03 per unit of risk. If you would invest 1,391 in Ashford Hospitality Trust on November 1, 2024 and sell it today you would earn a total of 88.00 from holding Ashford Hospitality Trust or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. First Industrial Realty
Performance |
| Timeline |
| Ashford Hospitality Trust |
| First Industrial Realty |
Ashford Hospitality and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and First Industrial
The main advantage of trading using opposite Ashford Hospitality and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, First Industrial 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 First Industrial will offset losses from the drop in First Industrial's long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality Trust |
| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. EastGroup Properties |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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