Correlation Between Acadia Realty and Ashford Hospitality

Can any of the company-specific risk be diversified away by investing in both Acadia Realty and Ashford Hospitality 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 Acadia Realty and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acadia Realty Trust and Ashford Hospitality Trust, you can compare the effects of market volatilities on Acadia Realty and Ashford Hospitality 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 Acadia Realty with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and Ashford Hospitality.

Diversification Opportunities for Acadia Realty and Ashford Hospitality

-0.22

Correlation Coefficient

Acadia Realty  Ashford Hospitality

Very good diversification

The 3 months correlation between Acadia and Ashford is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Acadia Realty i.e., Acadia Realty and Ashford Hospitality go up and down completely randomly.

Pair Corralation between Acadia Realty and Ashford Hospitality

Considering the 90-day investment horizon Acadia Realty Trust is expected to generate 0.29 times more return on investment than Ashford Hospitality. However, Acadia Realty Trust is 3.4 times less risky than Ashford Hospitality. It trades about 0.21 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about -0.07 per unit of risk. If you would invest  1,748  in Acadia Realty Trust on June 22, 2024 and sell it today you would earn a total of  520.00  from holding Acadia Realty Trust or generate 29.75% return on investment over 90 days.

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

Acadia Realty Trust  vs.  Ashford Hospitality Trust

Acadia Realty Trust

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking signals, Acadia Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Ashford Hospitality Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Ashford Hospitality is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Acadia Realty and Ashford Hospitality

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

The idea behind Acadia Realty Trust and Ashford Hospitality Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.