Correlation Between Ashford Hospitality and Whitestone REIT
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Whitestone 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 Whitestone 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 Whitestone REIT, you can compare the effects of market volatilities on Ashford Hospitality and Whitestone 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 Whitestone REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Whitestone REIT.
Diversification Opportunities for Ashford Hospitality and Whitestone REIT
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ashford and Whitestone is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone 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 Whitestone REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitestone REIT has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Whitestone REIT go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Whitestone REIT
Assuming the 90 days trading horizon Ashford Hospitality is expected to generate 1.34 times less return on investment than Whitestone REIT. In addition to that, Ashford Hospitality is 2.68 times more volatile than Whitestone REIT. It trades about 0.04 of its total potential returns per unit of risk. Whitestone REIT is currently generating about 0.16 per unit of volatility. If you would invest 1,414 in Whitestone REIT on August 24, 2024 and sell it today you would earn a total of 60.00 from holding Whitestone REIT or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Whitestone REIT
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Whitestone REIT |
Ashford Hospitality and Whitestone REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Whitestone REIT
The main advantage of trading using opposite Ashford Hospitality and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Whitestone 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 Whitestone REIT will offset losses from the drop in Whitestone REIT'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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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