Correlation Between LTC Properties and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both LTC 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 LTC 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 LTC Properties and Sotherly Hotels, you can compare the effects of market volatilities on LTC 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 LTC Properties with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC Properties and Sotherly Hotels.
Diversification Opportunities for LTC Properties and Sotherly Hotels
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LTC and Sotherly is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and LTC 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 LTC 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 LTC Properties i.e., LTC Properties and Sotherly Hotels go up and down completely randomly.
Pair Corralation between LTC Properties and Sotherly Hotels
Considering the 90-day investment horizon LTC Properties is expected to generate 0.25 times more return on investment than Sotherly Hotels. However, LTC Properties is 4.0 times less risky than Sotherly Hotels. It trades about 0.19 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.54 per unit of risk. If you would invest 3,712 in LTC Properties on September 2, 2024 and sell it today you would earn a total of 147.00 from holding LTC Properties or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LTC Properties vs. Sotherly Hotels
Performance |
| Timeline |
| LTC Properties |
| Sotherly Hotels |
LTC Properties and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LTC Properties and Sotherly Hotels
The main advantage of trading using opposite LTC Properties and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC 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.| LTC Properties vs. Medical Properties Trust | LTC Properties vs. Sabra Healthcare REIT | LTC Properties vs. Healthpeak Properties | LTC Properties vs. National Health Investors |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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