Correlation Between Ashford Hospitality and CBL Associates

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

Diversification Opportunities for Ashford Hospitality and CBL Associates

-0.54

Correlation Coefficient

Ashford Hospitality  CBL Associates

Excellent diversification

The 3 months correlation between Ashford and CBL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates 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 CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and CBL Associates go up and down completely randomly.

Pair Corralation between Ashford Hospitality and CBL Associates

Assuming the 90 days trading horizon Ashford Hospitality is expected to generate 2.45 times less return on investment than CBL Associates. In addition to that, Ashford Hospitality is 2.49 times more volatile than CBL Associates Properties. It trades about 0.02 of its total potential returns per unit of risk. CBL Associates Properties is currently generating about 0.12 per unit of volatility. If you would invest  2,533  in CBL Associates Properties on August 15, 2024 and sell it today you would earn a total of  225.00  from holding CBL Associates Properties or generate 8.88% 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.  CBL Associates Properties

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 rather sound basic indicators, Ashford Hospitality is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CBL Associates Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, CBL Associates may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ashford Hospitality and CBL Associates

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

The idea behind Ashford Hospitality Trust and CBL Associates 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.