Correlation Between Apple Hospitality and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple 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 Apple Hospitality REIT and Sotherly Hotels, you can compare the effects of market volatilities on Apple 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 Apple Hospitality with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple Hospitality and Sotherly Hotels.
Diversification Opportunities for Apple Hospitality and Sotherly Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Sotherly is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Hospitality REIT and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and Apple 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 Apple Hospitality REIT 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 has no effect on the direction of Apple Hospitality i.e., Apple Hospitality and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Apple Hospitality and Sotherly Hotels
Given the investment horizon of 90 days Apple Hospitality REIT is expected to generate 0.3 times more return on investment than Sotherly Hotels. However, Apple Hospitality REIT is 3.38 times less risky than Sotherly Hotels. It trades about 0.22 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.22 per unit of risk. If you would invest 1,502 in Apple Hospitality REIT on August 28, 2024 and sell it today you would earn a total of 130.00 from holding Apple Hospitality REIT or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Hospitality REIT vs. Sotherly Hotels
Performance |
| Timeline |
| Apple Hospitality REIT |
| Sotherly Hotels |
Apple Hospitality and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple Hospitality and Sotherly Hotels
The main advantage of trading using opposite Apple Hospitality and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple Hospitality vs. Park Hotels Resorts | Apple Hospitality vs. Diamondrock Hospitality | Apple Hospitality vs. Ryman Hospitality Properties | Apple Hospitality vs. Pebblebrook Hotel Trust |
| Sotherly Hotels vs. Summit Hotel Properties | Sotherly Hotels vs. Diamondrock Hospitality | Sotherly Hotels vs. RLJ Lodging Trust | Sotherly Hotels vs. Chatham Lodging Trust |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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