Correlation Between British American and ASHFORD HOSPITTRUST
Can any of the company-specific risk be diversified away by investing in both British American and ASHFORD HOSPITTRUST 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 British American and ASHFORD HOSPITTRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and ASHFORD HOSPITTRUST, you can compare the effects of market volatilities on British American and ASHFORD HOSPITTRUST 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 British American with a short position of ASHFORD HOSPITTRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and ASHFORD HOSPITTRUST.
Diversification Opportunities for British American and ASHFORD HOSPITTRUST
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and ASHFORD is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and ASHFORD HOSPITTRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHFORD HOSPITTRUST and British American 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 British American Tobacco are associated (or correlated) with ASHFORD HOSPITTRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHFORD HOSPITTRUST has no effect on the direction of British American i.e., British American and ASHFORD HOSPITTRUST go up and down completely randomly.
Pair Corralation between British American and ASHFORD HOSPITTRUST
If you would invest 3,231 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 350.00 from holding British American Tobacco or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. ASHFORD HOSPITTRUST
Performance |
| Timeline |
| British American Tobacco |
| ASHFORD HOSPITTRUST |
British American and ASHFORD HOSPITTRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and ASHFORD HOSPITTRUST
The main advantage of trading using opposite British American and ASHFORD HOSPITTRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, ASHFORD HOSPITTRUST 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 HOSPITTRUST will offset losses from the drop in ASHFORD HOSPITTRUST's long position.The idea behind British American Tobacco and ASHFORD HOSPITTRUST pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ASHFORD HOSPITTRUST vs. British American Tobacco | ASHFORD HOSPITTRUST vs. CNVISION MEDIA | ASHFORD HOSPITTRUST vs. Zijin Mining Group | ASHFORD HOSPITTRUST vs. PARKEN Sport Entertainment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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