Correlation Between Sotherly Hotels and APPLE HOSPITALITY
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and APPLE HOSPITALITY 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 Sotherly Hotels and APPLE HOSPITALITY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels and APPLE HOSPITALITY REIT, you can compare the effects of market volatilities on Sotherly Hotels and APPLE HOSPITALITY 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 Sotherly Hotels with a short position of APPLE HOSPITALITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and APPLE HOSPITALITY.
Diversification Opportunities for Sotherly Hotels and APPLE HOSPITALITY
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sotherly and APPLE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and APPLE HOSPITALITY REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE HOSPITALITY REIT and Sotherly Hotels 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 Sotherly Hotels are associated (or correlated) with APPLE HOSPITALITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE HOSPITALITY REIT has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and APPLE HOSPITALITY go up and down completely randomly.
Pair Corralation between Sotherly Hotels and APPLE HOSPITALITY
Assuming the 90 days horizon Sotherly Hotels is expected to under-perform the APPLE HOSPITALITY. In addition to that, Sotherly Hotels is 2.46 times more volatile than APPLE HOSPITALITY REIT. It trades about -0.15 of its total potential returns per unit of risk. APPLE HOSPITALITY REIT is currently generating about 0.17 per unit of volatility. If you would invest 1,378 in APPLE HOSPITALITY REIT on September 2, 2024 and sell it today you would earn a total of 131.00 from holding APPLE HOSPITALITY REIT or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotherly Hotels vs. APPLE HOSPITALITY REIT
Performance |
| Timeline |
| Sotherly Hotels |
| APPLE HOSPITALITY REIT |
Sotherly Hotels and APPLE HOSPITALITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and APPLE HOSPITALITY
The main advantage of trading using opposite Sotherly Hotels and APPLE HOSPITALITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, APPLE HOSPITALITY 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 APPLE HOSPITALITY will offset losses from the drop in APPLE HOSPITALITY's long position.| Sotherly Hotels vs. Superior Plus Corp | Sotherly Hotels vs. NMI Holdings | Sotherly Hotels vs. Origin Agritech | Sotherly Hotels vs. SIVERS SEMICONDUCTORS AB |
| APPLE HOSPITALITY vs. Superior Plus Corp | APPLE HOSPITALITY vs. NMI Holdings | APPLE HOSPITALITY vs. Origin Agritech | APPLE HOSPITALITY vs. SIVERS SEMICONDUCTORS AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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