Correlation Between Plaza Retail and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Plaza Retail 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 Plaza Retail and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plaza Retail REIT and Ashford Hospitality Trust, you can compare the effects of market volatilities on Plaza Retail 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 Plaza Retail with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and Ashford Hospitality.
Diversification Opportunities for Plaza Retail and Ashford Hospitality
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Plaza and Ashford is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT 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 Plaza Retail 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 Plaza Retail REIT 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 Plaza Retail i.e., Plaza Retail and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Plaza Retail and Ashford Hospitality
Assuming the 90 days horizon Plaza Retail REIT is expected to under-perform the Ashford Hospitality. But the pink sheet apears to be less risky and, when comparing its historical volatility, Plaza Retail REIT is 4.5 times less risky than Ashford Hospitality. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Ashford Hospitality Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,453 in Ashford Hospitality Trust on September 4, 2024 and sell it today you would earn a total of 17.00 from holding Ashford Hospitality Trust or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plaza Retail REIT vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Plaza Retail REIT |
| Ashford Hospitality Trust |
Plaza Retail and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Retail and Ashford Hospitality
The main advantage of trading using opposite Plaza Retail and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail 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.| Plaza Retail vs. Ashford Hospitality Trust | Plaza Retail vs. Ashford Hospitality Trust | Plaza Retail vs. Ashford Hospitality Trust | Plaza Retail vs. Ashford Hospitality Trust |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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