Correlation Between Ashford Hospitality and Clipper Realty

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

Diversification Opportunities for Ashford Hospitality and Clipper Realty

0.6

Correlation Coefficient

Ashford Hospitality  Clipper Realty

Poor diversification

The 3 months correlation between Ashford and Clipper is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty 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 Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Clipper Realty go up and down completely randomly.

Pair Corralation between Ashford Hospitality and Clipper Realty

Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Clipper Realty. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ashford Hospitality Trust is 1.09 times less risky than Clipper Realty. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Clipper Realty is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Clipper Realty on March 4, 2025 and sell it today you would lose (14.00) from holding Clipper Realty or give up 3.23% of portfolio value over 90 days.

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

Ashford Hospitality Trust  vs.  Clipper Realty

Ashford Hospitality Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Preferred Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Clipper Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clipper Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clipper Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ashford Hospitality and Clipper Realty

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

The idea behind Ashford Hospitality Trust and Clipper Realty 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.