Correlation Between Ashford Hospitality and Apartment Investment

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

Diversification Opportunities for Ashford Hospitality and Apartment Investment

-0.63

Correlation Coefficient

Ashford Hospitality  Apartment Investment

Excellent diversification

The 3 months correlation between Ashford and Apartment is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Apartment Investment go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Apartment Investment

Considering the 90-day investment horizon Ashford Hospitality Trust is expected to under-perform the Apartment Investment. In addition to that, Ashford Hospitality is 1.81 times more volatile than Apartment Investment and. It trades about -0.02 of its total potential returns per unit of risk. Apartment Investment and is currently generating about 0.02 per unit of volatility. If you would invest  801.00  in Apartment Investment and on February 24, 2024 and sell it today you would earn a total of  6.00  from holding Apartment Investment and or generate 0.75% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  Apartment Investment and

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. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Apartment Investment and

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ashford Hospitality and Apartment Investment

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

The idea behind Ashford Hospitality Trust and Apartment Investment and 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.