Correlation Between Ashford Hospitality and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Sotherly Hotels 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 Sotherly Hotels 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 Sotherly Hotels Pref, you can compare the effects of market volatilities on Ashford Hospitality and Sotherly Hotels 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 Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Sotherly Hotels.
Diversification Opportunities for Ashford Hospitality and Sotherly Hotels
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ashford and Sotherly is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Sotherly Hotels Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels Pref 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 Sotherly Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotherly Hotels Pref has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Sotherly Hotels
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Sotherly Hotels. In addition to that, Ashford Hospitality is 1.4 times more volatile than Sotherly Hotels Pref. It trades about -0.1 of its total potential returns per unit of risk. Sotherly Hotels Pref is currently generating about -0.02 per unit of volatility. If you would invest 1,770 in Sotherly Hotels Pref on September 12, 2024 and sell it today you would lose (56.00) from holding Sotherly Hotels Pref or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Sotherly Hotels Pref
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Sotherly Hotels Pref |
Ashford Hospitality and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Sotherly Hotels
The main advantage of trading using opposite Ashford Hospitality and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Sotherly Hotels 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 Sotherly Hotels will offset losses from the drop in Sotherly Hotels' long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality Trust |
| Sotherly Hotels vs. Sotherly Hotels | Sotherly Hotels vs. Service Properties Trust | Sotherly Hotels vs. Braemar Hotel Resorts | Sotherly Hotels vs. Summit Hotel Properties |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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