Correlation Between Ashford Hospitality and Choice Properties
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Choice Properties 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 Choice Properties 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 Choice Properties Real, you can compare the effects of market volatilities on Ashford Hospitality and Choice Properties 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 Choice Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Choice Properties.
Diversification Opportunities for Ashford Hospitality and Choice Properties
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ashford and Choice is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Choice Properties go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Choice Properties
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Choice Properties. In addition to that, Ashford Hospitality is 2.69 times more volatile than Choice Properties Real. It trades about -0.09 of its total potential returns per unit of risk. Choice Properties Real is currently generating about -0.14 per unit of volatility. If you would invest 1,071 in Choice Properties Real on September 14, 2024 and sell it today you would lose (103.00) from holding Choice Properties Real or give up 9.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 92.06% |
Values | Daily Returns |
Ashford Hospitality Trust vs. Choice Properties Real
Performance |
Timeline |
Ashford Hospitality Trust |
Choice Properties Real |
Ashford Hospitality and Choice Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ashford Hospitality and Choice Properties
The main advantage of trading using opposite Ashford Hospitality and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Choice Properties 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 Choice Properties will offset losses from the drop in Choice Properties' long position.Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust |
Choice Properties vs. Ashford Hospitality Trust | Choice Properties vs. Ashford Hospitality Trust | Choice Properties vs. Braemar Hotels Resorts | Choice Properties 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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