Correlation Between Braemar Hotels and Dream Industrial
Can any of the company-specific risk be diversified away by investing in both Braemar Hotels and Dream Industrial 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 Dream Industrial 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 Dream Industrial Real, you can compare the effects of market volatilities on Braemar Hotels and Dream Industrial 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 Dream Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Dream Industrial.
Diversification Opportunities for Braemar Hotels and Dream Industrial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Braemar and Dream is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Dream Industrial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Industrial Real 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 Dream Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Industrial Real has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Dream Industrial go up and down completely randomly.
Pair Corralation between Braemar Hotels and Dream Industrial
Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to generate 1.18 times more return on investment than Dream Industrial. However, Braemar Hotels is 1.18 times more volatile than Dream Industrial Real. It trades about -0.13 of its potential returns per unit of risk. Dream Industrial Real is currently generating about -0.4 per unit of risk. If you would invest 1,481 in Braemar Hotels Resorts on September 22, 2024 and sell it today you would lose (72.00) from holding Braemar Hotels Resorts or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braemar Hotels Resorts vs. Dream Industrial Real
Performance |
| Timeline |
| Braemar Hotels Resorts |
| Dream Industrial Real |
Braemar Hotels and Dream Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotels and Dream Industrial
The main advantage of trading using opposite Braemar Hotels and Dream Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels position performs unexpectedly, Dream Industrial 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 Dream Industrial will offset losses from the drop in Dream Industrial's long position.| Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Braemar Hotels Resorts | Braemar Hotels vs. Ashford Hospitality Trust |
| Dream Industrial vs. Ashford Hospitality Trust | Dream Industrial vs. Ashford Hospitality Trust | Dream Industrial vs. Braemar Hotels Resorts | Dream Industrial vs. Braemar Hotels Resorts |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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