Correlation Between Host Hotels and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Host 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 Host 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 Host Hotels Resorts and Ashford Hospitality Trust, you can compare the effects of market volatilities on Host 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 Host Hotels with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Ashford Hospitality.
Diversification Opportunities for Host Hotels and Ashford Hospitality
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Host and Ashford is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Host 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 Host 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 Host 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 Host Hotels i.e., Host Hotels and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Host Hotels and Ashford Hospitality
Considering the 90-day investment horizon Host Hotels Resorts is expected to generate 0.32 times more return on investment than Ashford Hospitality. However, Host Hotels Resorts is 3.13 times less risky than Ashford Hospitality. It trades about 0.02 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about -0.05 per unit of risk. If you would invest 1,596 in Host Hotels Resorts on August 25, 2024 and sell it today you would earn a total of 229.00 from holding Host Hotels Resorts or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Host Hotels Resorts |
| Ashford Hospitality Trust |
Host Hotels and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Ashford Hospitality
The main advantage of trading using opposite Host Hotels and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host 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.| Host Hotels vs. Service Properties Trust | Host Hotels vs. Diamondrock Hospitality | Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Ryman Hospitality Properties |
| Ashford Hospitality vs. Diamondrock Hospitality | Ashford Hospitality vs. Ryman Hospitality Properties | Ashford Hospitality vs. Pebblebrook Hotel Trust | Ashford Hospitality vs. Host 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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