Correlation Between Dream Industrial and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Dream Industrial 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 Dream Industrial and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and Ashford Hospitality Trust, you can compare the effects of market volatilities on Dream Industrial 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 Dream Industrial with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Ashford Hospitality.
Diversification Opportunities for Dream Industrial and Ashford Hospitality
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and Ashford is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real 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 Dream Industrial 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 Dream Industrial Real 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 Dream Industrial i.e., Dream Industrial and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Dream Industrial and Ashford Hospitality
Assuming the 90 days horizon Dream Industrial Real is expected to under-perform the Ashford Hospitality. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dream Industrial Real is 2.7 times less risky than Ashford Hospitality. The pink sheet trades about -0.4 of its potential returns per unit of risk. The Ashford Hospitality Trust is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,463 in Ashford Hospitality Trust on September 22, 2024 and sell it today you would lose (181.00) from holding Ashford Hospitality Trust or give up 12.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Industrial Real vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Dream Industrial Real |
| Ashford Hospitality Trust |
Dream Industrial and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Industrial and Ashford Hospitality
The main advantage of trading using opposite Dream Industrial and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial 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.| Dream Industrial vs. Ashford Hospitality Trust | Dream Industrial vs. Ashford Hospitality Trust | Dream Industrial vs. Braemar Hotels Resorts | Dream Industrial vs. Braemar Hotels Resorts |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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