Correlation Between EastGroup Properties and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both EastGroup Properties 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 EastGroup Properties and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EastGroup Properties and Sotherly Hotels, you can compare the effects of market volatilities on EastGroup Properties 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 EastGroup Properties with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of EastGroup Properties and Sotherly Hotels.
Diversification Opportunities for EastGroup Properties and Sotherly Hotels
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EastGroup and Sotherly is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and EastGroup Properties 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 EastGroup Properties 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 EastGroup Properties i.e., EastGroup Properties and Sotherly Hotels go up and down completely randomly.
Pair Corralation between EastGroup Properties and Sotherly Hotels
Considering the 90-day investment horizon EastGroup Properties is expected to under-perform the Sotherly Hotels. But the stock apears to be less risky and, when comparing its historical volatility, EastGroup Properties is 1.94 times less risky than Sotherly Hotels. The stock trades about -0.31 of its potential returns per unit of risk. The Sotherly Hotels is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Sotherly Hotels on October 9, 2024 and sell it today you would lose (5.00) from holding Sotherly Hotels or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
EastGroup Properties vs. Sotherly Hotels
Performance |
| Timeline |
| EastGroup Properties |
| Sotherly Hotels |
EastGroup Properties and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EastGroup Properties and Sotherly Hotels
The main advantage of trading using opposite EastGroup Properties and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties 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.| EastGroup Properties vs. Terreno Realty | EastGroup Properties vs. Plymouth Industrial REIT | EastGroup Properties vs. LXP Industrial Trust | EastGroup Properties vs. First Industrial Realty |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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