Correlation Between Aspen Digital and Braemar Hotels
Can any of the company-specific risk be diversified away by investing in both Aspen Digital and Braemar Hotels 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 Aspen Digital and Braemar Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Digital and Braemar Hotels Resorts, you can compare the effects of market volatilities on Aspen Digital and Braemar Hotels 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 Aspen Digital with a short position of Braemar Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Digital and Braemar Hotels.
Diversification Opportunities for Aspen Digital and Braemar Hotels
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and Braemar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Digital and Braemar Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotels Resorts and Aspen Digital 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 Aspen Digital are associated (or correlated) with Braemar Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotels Resorts has no effect on the direction of Aspen Digital i.e., Aspen Digital and Braemar Hotels go up and down completely randomly.
Pair Corralation between Aspen Digital and Braemar Hotels
Given the investment horizon of 90 days Aspen Digital is expected to generate 0.21 times more return on investment than Braemar Hotels. However, Aspen Digital is 4.72 times less risky than Braemar Hotels. It trades about 0.06 of its potential returns per unit of risk. Braemar Hotels Resorts is currently generating about -0.05 per unit of risk. If you would invest 335.00 in Aspen Digital on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Aspen Digital or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Digital vs. Braemar Hotels Resorts
Performance |
| Timeline |
| Aspen Digital |
| Braemar Hotels Resorts |
Aspen Digital and Braemar Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Digital and Braemar Hotels
The main advantage of trading using opposite Aspen Digital and Braemar Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Digital position performs unexpectedly, Braemar Hotels 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 Braemar Hotels will offset losses from the drop in Braemar Hotels' long position.| Aspen Digital vs. Copa Holdings SA | Aspen Digital vs. United Airlines Holdings | Aspen Digital vs. Delta Air Lines | Aspen Digital vs. SkyWest |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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