Correlation Between Hersha Hospitality and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Hersha 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 Hersha 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 Hersha Hospitality Trust and Ashford Hospitality Trust, you can compare the effects of market volatilities on Hersha 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 Hersha Hospitality with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hersha Hospitality and Ashford Hospitality.
Diversification Opportunities for Hersha Hospitality and Ashford Hospitality
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hersha and Ashford is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hersha Hospitality Trust 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 Hersha 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 Hersha Hospitality Trust 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 Hersha Hospitality i.e., Hersha Hospitality and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Hersha Hospitality and Ashford Hospitality
Allowing for the 90-day total investment horizon Hersha Hospitality Trust is expected to under-perform the Ashford Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Hersha Hospitality Trust is 1.38 times less risky than Ashford Hospitality. The stock trades about -0.16 of its potential returns per unit of risk. The 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 Together |
| Strength | Very Weak |
| Accuracy | 22.67% |
| Values | Daily Returns |
Hersha Hospitality Trust vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Hersha Hospitality Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ashford Hospitality Trust |
Hersha Hospitality and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hersha Hospitality and Ashford Hospitality
The main advantage of trading using opposite Hersha Hospitality and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hersha 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.| Hersha Hospitality vs. RLJ Lodging Trust | Hersha Hospitality vs. Sunstone Hotel Investors | Hersha Hospitality vs. Pebblebrook Hotel Trust | Hersha Hospitality vs. Summit Hotel Properties |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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