Correlation Between Ashford Hospitality and Moringa Acquisition

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Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Moringa Acquisition 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 Moringa Acquisition 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 Moringa Acquisition Corp, you can compare the effects of market volatilities on Ashford Hospitality and Moringa Acquisition 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 Moringa Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Moringa Acquisition.

Diversification Opportunities for Ashford Hospitality and Moringa Acquisition

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ashford and Moringa is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Moringa Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moringa Acquisition Corp 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 Moringa Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moringa Acquisition Corp has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Moringa Acquisition go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Moringa Acquisition

Considering the 90-day investment horizon Ashford Hospitality Trust is expected to generate 0.82 times more return on investment than Moringa Acquisition. However, Ashford Hospitality Trust is 1.22 times less risky than Moringa Acquisition. It trades about -0.06 of its potential returns per unit of risk. Moringa Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  4,230  in Ashford Hospitality Trust on August 31, 2024 and sell it today you would lose (3,335) from holding Ashford Hospitality Trust or give up 78.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy80.21%
ValuesDaily Returns

Ashford Hospitality Trust  vs.  Moringa Acquisition Corp

 Performance 
       Timeline  
Ashford Hospitality Trust 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, Ashford Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.
Moringa Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Moringa Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Moringa Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ashford Hospitality and Moringa Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ashford Hospitality and Moringa Acquisition

The main advantage of trading using opposite Ashford Hospitality and Moringa Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Moringa Acquisition 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 Moringa Acquisition will offset losses from the drop in Moringa Acquisition's long position.
The idea behind Ashford Hospitality Trust and Moringa Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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