Correlation Between Braemar Hotels and Highlands REIT
Can any of the company-specific risk be diversified away by investing in both Braemar Hotels and Highlands REIT 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 Highlands REIT 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 Highlands REIT, you can compare the effects of market volatilities on Braemar Hotels and Highlands REIT 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 Highlands REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Highlands REIT.
Diversification Opportunities for Braemar Hotels and Highlands REIT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Braemar and Highlands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Highlands REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands REIT 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 Highlands REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands REIT has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Highlands REIT go up and down completely randomly.
Pair Corralation between Braemar Hotels and Highlands REIT
Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to under-perform the Highlands REIT. But the preferred stock apears to be less risky and, when comparing its historical volatility, Braemar Hotels Resorts is 39.75 times less risky than Highlands REIT. The preferred stock trades about -0.18 of its potential returns per unit of risk. The Highlands REIT is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2.16 in Highlands REIT on September 12, 2024 and sell it today you would earn a total of 0.74 from holding Highlands REIT or generate 34.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Braemar Hotels Resorts vs. Highlands REIT
Performance |
| Timeline |
| Braemar Hotels Resorts |
| Highlands REIT |
Braemar Hotels and Highlands REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotels and Highlands REIT
The main advantage of trading using opposite Braemar Hotels and Highlands REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels position performs unexpectedly, Highlands REIT 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 Highlands REIT will offset losses from the drop in Highlands REIT'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 |
| Highlands REIT vs. Ashford Hospitality Trust | Highlands REIT vs. Ashford Hospitality Trust | Highlands REIT vs. Braemar Hotels Resorts | Highlands REIT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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