Correlation Between Ashford Hospitality and W P

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

Diversification Opportunities for Ashford Hospitality and W P

-0.51

Correlation Coefficient

Ashford Hospitality  W P

Excellent diversification

The 3 months correlation between Ashford and WPC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and W P go up and down completely randomly.

Pair Corralation between Ashford Hospitality and W P

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 1.4 times more return on investment than W P. However, Ashford Hospitality is 1.4 times more volatile than W P Carey. It trades about 0.1 of its potential returns per unit of risk. W P Carey is currently generating about -0.06 per unit of risk. If you would invest  1,350  in Ashford Hospitality Trust on February 1, 2024 and sell it today you would earn a total of  60.00  from holding Ashford Hospitality Trust or generate 4.44% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  W P Carey

Ashford Hospitality Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford Hospitality Trust are ranked lower than 8 (%) 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.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ashford Hospitality and W P

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

The idea behind Ashford Hospitality Trust and W P Carey 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.