Correlation Between Ashford Hospitality and EPR Properties

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

Diversification Opportunities for Ashford Hospitality and EPR Properties

-0.56

Correlation Coefficient

Ashford Hospitality  EPR Properties

Excellent diversification

The 3 months correlation between Ashford and EPR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and EPR Properties go up and down completely randomly.

Pair Corralation between Ashford Hospitality and EPR Properties

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the EPR Properties. In addition to that, Ashford Hospitality is 1.67 times more volatile than EPR Properties. It trades about 0.0 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.0 per unit of volatility. If you would invest  4,350  in EPR Properties on January 30, 2024 and sell it today you would lose (251.00) from holding EPR Properties or give up 5.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Ashford Hospitality Trust  vs.  EPR Properties

Ashford Hospitality Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ashford Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ashford Hospitality and EPR Properties

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

The idea behind Ashford Hospitality Trust and EPR Properties 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..