Correlation Between Power REIT and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Power REIT 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 Power REIT and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Ashford Hospitality Trust, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Ashford Hospitality.
Diversification Opportunities for Power REIT and Ashford Hospitality
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Ashford is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Power 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 Power REIT 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 Power 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 Power REIT i.e., Power REIT and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Power REIT and Ashford Hospitality
Allowing for the 90-day total investment horizon Power REIT is expected to generate 3.09 times more return on investment than Ashford Hospitality. However, Power REIT is 3.09 times more volatile than Ashford Hospitality Trust. It trades about 0.07 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.04 per unit of risk. If you would invest 108.00 in Power REIT on November 1, 2024 and sell it today you would earn a total of 17.00 from holding Power REIT or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Power REIT |
| Ashford Hospitality Trust |
Power REIT and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Ashford Hospitality
The main advantage of trading using opposite Power REIT and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust | 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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