Correlation Between Ashford Hospitality and Cushman Wakefield

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

Diversification Opportunities for Ashford Hospitality and Cushman Wakefield

0.03

Correlation Coefficient

Ashford Hospitality  Cushman Wakefield

Significant diversification

The 3 months correlation between Ashford and Cushman is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Cushman Wakefield plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cushman Wakefield plc 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 Cushman Wakefield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cushman Wakefield plc has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Cushman Wakefield go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Cushman Wakefield

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 0.97 times more return on investment than Cushman Wakefield. However, Ashford Hospitality Trust is 1.03 times less risky than Cushman Wakefield. It trades about 0.12 of its potential returns per unit of risk. Cushman Wakefield plc is currently generating about 0.06 per unit of risk. If you would invest  1,311  in Ashford Hospitality Trust on February 22, 2024 and sell it today you would earn a total of  184.00  from holding Ashford Hospitality Trust or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ashford Hospitality Trust  vs.  Cushman Wakefield plc

Ashford Hospitality Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Ashford Hospitality exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cushman Wakefield plc

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cushman Wakefield plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Cushman Wakefield may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ashford Hospitality and Cushman Wakefield

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

The idea behind Ashford Hospitality Trust and Cushman Wakefield plc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.