Correlation Between Independence Realty and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Independence Realty 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 Independence Realty and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Realty Trust and Sotherly Hotels, you can compare the effects of market volatilities on Independence Realty 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 Independence Realty with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Sotherly Hotels.
Diversification Opportunities for Independence Realty and Sotherly Hotels
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Independence and Sotherly is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and Independence Realty 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 Independence Realty 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 has no effect on the direction of Independence Realty i.e., Independence Realty and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Independence Realty and Sotherly Hotels
Considering the 90-day investment horizon Independence Realty Trust is expected to generate 0.26 times more return on investment than Sotherly Hotels. However, Independence Realty Trust is 3.83 times less risky than Sotherly Hotels. It trades about 0.21 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.08 per unit of risk. If you would invest 2,061 in Independence Realty Trust on September 13, 2024 and sell it today you would earn a total of 84.00 from holding Independence Realty Trust or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Realty Trust vs. Sotherly Hotels
Performance |
| Timeline |
| Independence Realty Trust |
| Sotherly Hotels |
Independence Realty and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Realty and Sotherly Hotels
The main advantage of trading using opposite Independence Realty and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Realty 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.| Independence Realty vs. Apartment Investment and | Independence Realty vs. Clipper Realty | Independence Realty vs. BRT Realty Trust | Independence Realty vs. UDR Inc |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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