Correlation Between Ashford Hospitality and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Diamondrock Hospitality 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 Diamondrock Hospitality 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 Diamondrock Hospitality, you can compare the effects of market volatilities on Ashford Hospitality and Diamondrock Hospitality 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 Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Diamondrock Hospitality.
Diversification Opportunities for Ashford Hospitality and Diamondrock Hospitality
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ashford and Diamondrock is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Diamondrock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality 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 Diamondrock Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondrock Hospitality has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Diamondrock Hospitality
Considering the 90-day investment horizon Ashford Hospitality Trust is expected to generate 5.04 times more return on investment than Diamondrock Hospitality. However, Ashford Hospitality is 5.04 times more volatile than Diamondrock Hospitality. It trades about 0.22 of its potential returns per unit of risk. Diamondrock Hospitality is currently generating about 0.09 per unit of risk. If you would invest 610.00 in Ashford Hospitality Trust on August 29, 2024 and sell it today you would earn a total of 284.00 from holding Ashford Hospitality Trust or generate 46.56% 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. Diamondrock Hospitality
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Diamondrock Hospitality |
Ashford Hospitality and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Diamondrock Hospitality
The main advantage of trading using opposite Ashford Hospitality and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Diamondrock Hospitality 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 Diamondrock Hospitality will offset losses from the drop in Diamondrock Hospitality's long position.| Ashford Hospitality vs. Sotherly Hotels | Ashford Hospitality vs. Summit Hotel Properties | Ashford Hospitality vs. Diamondrock Hospitality | Ashford Hospitality vs. RLJ Lodging Trust |
| Diamondrock Hospitality vs. Summit Hotel Properties | Diamondrock Hospitality vs. RLJ Lodging Trust | Diamondrock Hospitality vs. Pebblebrook Hotel Trust | Diamondrock Hospitality vs. Sunstone Hotel Investors |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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