Correlation Between Ashford Hospitality and Cal Bay
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Cal Bay 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 Cal Bay 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 Cal Bay Intl, you can compare the effects of market volatilities on Ashford Hospitality and Cal Bay 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 Cal Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Cal Bay.
Diversification Opportunities for Ashford Hospitality and Cal Bay
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ashford and Cal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Cal Bay Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Bay Intl 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 Cal Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Bay Intl has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Cal Bay go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Cal Bay
Assuming the 90 days trading horizon Ashford Hospitality is expected to generate 80.65 times less return on investment than Cal Bay. But when comparing it to its historical volatility, Ashford Hospitality Trust is 20.71 times less risky than Cal Bay. It trades about 0.02 of its potential returns per unit of risk. Cal Bay Intl is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Cal Bay Intl on September 20, 2024 and sell it today you would earn a total of 0.00 from holding Cal Bay Intl or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Cal Bay Intl
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Cal Bay Intl |
Ashford Hospitality and Cal Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Cal Bay
The main advantage of trading using opposite Ashford Hospitality and Cal Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Cal Bay 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 Cal Bay will offset losses from the drop in Cal Bay's long position.| Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Aspen Digital | Ashford Hospitality vs. Sunstone Hotel Investors |
| Cal Bay vs. Ashford Hospitality Trust | Cal Bay vs. Ashford Hospitality Trust | Cal Bay vs. Braemar Hotels Resorts | Cal Bay vs. Braemar Hotels Resorts |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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