Correlation Between Realty Income and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Ashford Hospitality Trust, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Ashford Hospitality.
Diversification Opportunities for Realty Income and Ashford Hospitality
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Realty and Ashford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Realty Income and Ashford Hospitality
Taking into account the 90-day investment horizon Realty Income is expected to generate 87.1 times less return on investment than Ashford Hospitality. But when comparing it to its historical volatility, Realty Income is 2.55 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 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Ashford Hospitality Trust on November 9, 2024 and sell it today you would earn a total of 440.00 from holding Ashford Hospitality Trust or generate 43.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Realty Income |
| Ashford Hospitality Trust |
Realty Income and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Ashford Hospitality
The main advantage of trading using opposite Realty Income and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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