Correlation Between Ashford Hospitality and Realty Income
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Realty Income 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 Realty Income 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 Realty Income, you can compare the effects of market volatilities on Ashford Hospitality and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Realty Income.
Diversification Opportunities for Ashford Hospitality and Realty Income
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashford and Realty is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Realty Income go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Realty Income
Considering the 90-day investment horizon Ashford Hospitality Trust is expected to generate 5.21 times more return on investment than Realty Income. However, Ashford Hospitality is 5.21 times more volatile than Realty Income. It trades about -0.02 of its potential returns per unit of risk. Realty Income is currently generating about -0.22 per unit of risk. If you would invest 872.00 in Ashford Hospitality Trust on September 18, 2024 and sell it today you would lose (28.00) from holding Ashford Hospitality Trust or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Realty Income
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Realty Income |
Ashford Hospitality and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Realty Income
The main advantage of trading using opposite Ashford Hospitality and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Ashford Hospitality vs. Pebblebrook Hotel Trust | Ashford Hospitality vs. Service Properties Trust | Ashford Hospitality vs. RLJ Lodging Trust |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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