Correlation Between Crown Castle and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Crown Castle 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 Crown Castle and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Castle and Sotherly Hotels, you can compare the effects of market volatilities on Crown Castle 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 Crown Castle with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and Sotherly Hotels.
Diversification Opportunities for Crown Castle and Sotherly Hotels
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Sotherly is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and Crown Castle 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 Crown Castle 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 Crown Castle i.e., Crown Castle and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Crown Castle and Sotherly Hotels
Considering the 90-day investment horizon Crown Castle is expected to generate 0.8 times more return on investment than Sotherly Hotels. However, Crown Castle is 1.24 times less risky than Sotherly Hotels. It trades about 0.0 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.35 per unit of risk. If you would invest 8,926 in Crown Castle on November 2, 2024 and sell it today you would lose (23.00) from holding Crown Castle or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Castle vs. Sotherly Hotels
Performance |
| Timeline |
| Crown Castle |
| Sotherly Hotels |
Crown Castle and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Castle and Sotherly Hotels
The main advantage of trading using opposite Crown Castle and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Castle 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.| Crown Castle vs. Digital Realty Trust | Crown Castle vs. Equinix | Crown Castle vs. SBA Communications Corp | Crown Castle vs. Iron Mountain Incorporated |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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