Correlation Between Ashford Hospitality and Slate Grocery

Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Slate Grocery 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 Slate Grocery 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 Slate Grocery REIT, you can compare the effects of market volatilities on Ashford Hospitality and Slate Grocery 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 Slate Grocery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Slate Grocery.

Diversification Opportunities for Ashford Hospitality and Slate Grocery

-0.04

Correlation Coefficient

Ashford Hospitality  Slate Grocery

Good diversification

The 3 months correlation between Ashford and Slate is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT 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 Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Slate Grocery go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Slate Grocery

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Slate Grocery. In addition to that, Ashford Hospitality is 2.7 times more volatile than Slate Grocery REIT. It trades about -0.05 of its total potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.03 per unit of volatility. If you would invest  1,009  in Slate Grocery REIT on September 14, 2024 and sell it today you would earn a total of  19.00  from holding Slate Grocery REIT or generate 1.88% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  Slate Grocery REIT

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 fragile performance, the Preferred Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Slate Grocery REIT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ashford Hospitality and Slate Grocery

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

The idea behind Ashford Hospitality Trust and Slate Grocery REIT 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.