Correlation Between Chatham Lodging and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Chatham Lodging 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 Chatham Lodging and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chatham Lodging Trust and Sotherly Hotels Series, you can compare the effects of market volatilities on Chatham Lodging 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 Chatham Lodging with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chatham Lodging and Sotherly Hotels.
Diversification Opportunities for Chatham Lodging and Sotherly Hotels
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chatham and Sotherly is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chatham Lodging Trust and Sotherly Hotels Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels Series and Chatham Lodging 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 Chatham Lodging 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 Series has no effect on the direction of Chatham Lodging i.e., Chatham Lodging and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Chatham Lodging and Sotherly Hotels
Given the investment horizon of 90 days Chatham Lodging Trust is expected to generate 2.7 times more return on investment than Sotherly Hotels. However, Chatham Lodging is 2.7 times more volatile than Sotherly Hotels Series. It trades about 0.19 of its potential returns per unit of risk. Sotherly Hotels Series is currently generating about -0.22 per unit of risk. If you would invest 825.00 in Chatham Lodging Trust on August 27, 2024 and sell it today you would earn a total of 96.00 from holding Chatham Lodging Trust or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chatham Lodging Trust vs. Sotherly Hotels Series
Performance |
| Timeline |
| Chatham Lodging Trust |
| Sotherly Hotels Series |
Chatham Lodging and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chatham Lodging and Sotherly Hotels
The main advantage of trading using opposite Chatham Lodging and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chatham Lodging 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.| Chatham Lodging vs. Summit Hotel Properties | Chatham Lodging vs. RLJ Lodging Trust | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Whitestone REIT |
| Sotherly Hotels vs. RLJ Lodging Trust | Sotherly Hotels vs. Diamondrock Hospitality | Sotherly Hotels vs. Chatham Lodging Trust | Sotherly Hotels vs. Xenia Hotels Resorts |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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