Correlation Between Diamondrock Hospitality and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Diamondrock Hospitality 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 Diamondrock Hospitality and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondrock Hospitality and Ashford Hospitality Trust, you can compare the effects of market volatilities on Diamondrock Hospitality 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 Diamondrock Hospitality with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondrock Hospitality and Ashford Hospitality.
Diversification Opportunities for Diamondrock Hospitality and Ashford Hospitality
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamondrock and Ashford is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality 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 Diamondrock Hospitality 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 Diamondrock Hospitality 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 Diamondrock Hospitality i.e., Diamondrock Hospitality and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Diamondrock Hospitality and Ashford Hospitality
Considering the 90-day investment horizon Diamondrock Hospitality is expected to generate 7.09 times less return on investment than Ashford Hospitality. But when comparing it to its historical volatility, Diamondrock Hospitality is 1.8 times less risky than Ashford Hospitality. It trades about 0.0 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,387 in Ashford Hospitality Trust on November 2, 2024 and sell it today you would earn a total of 63.00 from holding Ashford Hospitality Trust or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondrock Hospitality vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Diamondrock Hospitality |
| Ashford Hospitality Trust |
Diamondrock Hospitality and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondrock Hospitality and Ashford Hospitality
The main advantage of trading using opposite Diamondrock Hospitality and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality 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.| Diamondrock Hospitality vs. Summit Hotel Properties | Diamondrock Hospitality vs. RLJ Lodging Trust | Diamondrock Hospitality vs. Pebblebrook Hotel Trust | Diamondrock Hospitality vs. Sunstone Hotel Investors |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |