Correlation Between Braemar Hotels and Aspen Digital
Can any of the company-specific risk be diversified away by investing in both Braemar Hotels and Aspen Digital 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 Braemar Hotels and Aspen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braemar Hotels Resorts and Aspen Digital, you can compare the effects of market volatilities on Braemar Hotels and Aspen Digital 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 Braemar Hotels with a short position of Aspen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Aspen Digital.
Diversification Opportunities for Braemar Hotels and Aspen Digital
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braemar and Aspen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Aspen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Digital and Braemar Hotels 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 Braemar Hotels Resorts are associated (or correlated) with Aspen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Digital has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Aspen Digital go up and down completely randomly.
Pair Corralation between Braemar Hotels and Aspen Digital
Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to under-perform the Aspen Digital. In addition to that, Braemar Hotels is 4.72 times more volatile than Aspen Digital. It trades about -0.05 of its total potential returns per unit of risk. Aspen Digital is currently generating about 0.06 per unit of volatility. If you would invest 335.00 in Aspen Digital on August 28, 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 |
Braemar Hotels Resorts vs. Aspen Digital
Performance |
| Timeline |
| Braemar Hotels Resorts |
| Aspen Digital |
Braemar Hotels and Aspen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotels and Aspen Digital
The main advantage of trading using opposite Braemar Hotels and Aspen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels position performs unexpectedly, Aspen Digital 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 Aspen Digital will offset losses from the drop in Aspen Digital's long position.| Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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