Correlation Between Ashford Hospitality and Melcor Developments
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Melcor Developments 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 Melcor Developments 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 Melcor Developments, you can compare the effects of market volatilities on Ashford Hospitality and Melcor Developments 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 Melcor Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Melcor Developments.
Diversification Opportunities for Ashford Hospitality and Melcor Developments
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ashford and Melcor is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Melcor Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melcor Developments 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 Melcor Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melcor Developments has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Melcor Developments go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Melcor Developments
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.7 times more return on investment than Melcor Developments. However, Ashford Hospitality is 2.7 times more volatile than Melcor Developments. It trades about 0.03 of its potential returns per unit of risk. Melcor Developments is currently generating about 0.03 per unit of risk. If you would invest 1,227 in Ashford Hospitality Trust on September 12, 2024 and sell it today you would earn a total of 198.00 from holding Ashford Hospitality Trust or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 53.98% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Melcor Developments
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Melcor Developments |
Ashford Hospitality and Melcor Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Melcor Developments
The main advantage of trading using opposite Ashford Hospitality and Melcor Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Melcor Developments 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 Melcor Developments will offset losses from the drop in Melcor Developments' 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 |
| Melcor Developments vs. Ashford Hospitality Trust | Melcor Developments vs. Ashford Hospitality Trust | Melcor Developments vs. Braemar Hotels Resorts | Melcor Developments 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |