Correlation Between Ashford Hospitality and Gladstone Capital

Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Gladstone Capital 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 Ashford Hospitality and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashford Hospitality Trust and Gladstone Capital, you can compare the effects of market volatilities on Ashford Hospitality and Gladstone Capital 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 Ashford Hospitality with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Gladstone Capital.

Diversification Opportunities for Ashford Hospitality and Gladstone Capital

-0.48

Correlation Coefficient

Ashford Hospitality  Gladstone Capital

Very good diversification

The 3 months correlation between Ashford and Gladstone is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Ashford 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 Ashford Hospitality Trust are associated (or correlated) with Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Gladstone Capital go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Gladstone Capital

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Gladstone Capital. In addition to that, Ashford Hospitality is 16.59 times more volatile than Gladstone Capital. It trades about -0.07 of its total potential returns per unit of risk. Gladstone Capital is currently generating about 0.13 per unit of volatility. If you would invest  2,486  in Gladstone Capital on September 2, 2024 and sell it today you would earn a total of  34.00  from holding Gladstone Capital or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ashford Hospitality Trust  vs.  Gladstone Capital

Ashford Hospitality Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gladstone Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Gladstone Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ashford Hospitality and Gladstone Capital

The main advantage of trading using opposite Ashford Hospitality and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Gladstone Capital 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 Gladstone Capital will offset losses from the drop in Gladstone Capital's long position.

The idea behind Ashford Hospitality Trust and Gladstone Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.