Correlation Between Braemar Hotels and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Braemar Hotels and Ashford Hospitality 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 Ashford Hospitality 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 Ashford Hospitality Trust, you can compare the effects of market volatilities on Braemar Hotels and Ashford Hospitality 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 Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Ashford Hospitality.
Diversification Opportunities for Braemar Hotels and Ashford Hospitality
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Braemar and Ashford is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust 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 Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Braemar Hotels and Ashford Hospitality
Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to under-perform the Ashford Hospitality. But the preferred stock apears to be less risky and, when comparing its historical volatility, Braemar Hotels Resorts is 1.56 times less risky than Ashford Hospitality. The preferred stock trades about -0.18 of its potential returns per unit of risk. The Ashford Hospitality Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Ashford Hospitality Trust on August 24, 2024 and sell it today you would earn a total of 24.00 from holding Ashford Hospitality Trust or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braemar Hotels Resorts vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Braemar Hotels Resorts |
| Ashford Hospitality Trust |
Braemar Hotels and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotels and Ashford Hospitality
The main advantage of trading using opposite Braemar Hotels and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels position performs unexpectedly, Ashford Hospitality 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 Ashford Hospitality will offset losses from the drop in Ashford Hospitality'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 |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality Trust |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |