Correlation Between Healthcare Trust and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Healthcare Trust 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 Healthcare Trust and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthcare Trust PR and Sotherly Hotels PR, you can compare the effects of market volatilities on Healthcare Trust 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 Healthcare Trust with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Trust and Sotherly Hotels.
Diversification Opportunities for Healthcare Trust and Sotherly Hotels
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Healthcare and Sotherly is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Trust PR and Sotherly Hotels PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels PR and Healthcare Trust 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 Healthcare Trust PR 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 PR has no effect on the direction of Healthcare Trust i.e., Healthcare Trust and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Healthcare Trust and Sotherly Hotels
Given the investment horizon of 90 days Healthcare Trust PR is expected to generate 0.67 times more return on investment than Sotherly Hotels. However, Healthcare Trust PR is 1.49 times less risky than Sotherly Hotels. It trades about 0.29 of its potential returns per unit of risk. Sotherly Hotels PR is currently generating about -0.07 per unit of risk. If you would invest 1,433 in Healthcare Trust PR on November 1, 2024 and sell it today you would earn a total of 92.00 from holding Healthcare Trust PR or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.0% |
| Values | Daily Returns |
Healthcare Trust PR vs. Sotherly Hotels PR
Performance |
| Timeline |
| Healthcare Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sotherly Hotels PR |
Healthcare Trust and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Trust and Sotherly Hotels
The main advantage of trading using opposite Healthcare Trust and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Trust 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.| Healthcare Trust vs. Gladstone Commercial Corp | Healthcare Trust vs. Heartland Financial USA | Healthcare Trust vs. Sotherly Hotels PR | Healthcare Trust vs. B Riley Financial |
| Sotherly Hotels vs. Sotherly Hotels | Sotherly Hotels vs. Braemar Hotel Resorts | Sotherly Hotels vs. Summit Hotel Properties | Sotherly Hotels vs. Service Properties 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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