Correlation Between Ashford Hospitality and Holiday Island
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Holiday Island 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 Holiday Island 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 Holiday Island Holdings, you can compare the effects of market volatilities on Ashford Hospitality and Holiday Island 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 Holiday Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Holiday Island.
Diversification Opportunities for Ashford Hospitality and Holiday Island
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ashford and Holiday is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island Holdings 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 Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Holiday Island go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Holiday Island
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Holiday Island. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ashford Hospitality Trust is 4.83 times less risky than Holiday Island. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Holiday Island Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.33 in Holiday Island Holdings on March 8, 2024 and sell it today you would earn a total of 0.72 from holding Holiday Island Holdings or generate 30.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ashford Hospitality Trust vs. Holiday Island Holdings
Performance |
Timeline |
Ashford Hospitality Trust |
Holiday Island Holdings |
Ashford Hospitality and Holiday Island Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ashford Hospitality and Holiday Island
The main advantage of trading using opposite Ashford Hospitality and Holiday Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Holiday Island 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 Holiday Island will offset losses from the drop in Holiday Island's long position.Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Aspen Digital | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts |
Holiday Island vs. Ashford Hospitality Trust | Holiday Island vs. Ashford Hospitality Trust | Holiday Island vs. Ashford Hospitality Trust | Holiday Island vs. Ashford Hospitality Trust |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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