Correlation Between Medalist Diversified and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both Medalist Diversified 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 Medalist Diversified and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medalist Diversified Reit and Sotherly Hotels PR, you can compare the effects of market volatilities on Medalist Diversified 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 Medalist Diversified with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medalist Diversified and Sotherly Hotels.
Diversification Opportunities for Medalist Diversified and Sotherly Hotels
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medalist and Sotherly is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Medalist Diversified Reit 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 Medalist Diversified 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 Medalist Diversified Reit 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 Medalist Diversified i.e., Medalist Diversified and Sotherly Hotels go up and down completely randomly.
Pair Corralation between Medalist Diversified and Sotherly Hotels
Assuming the 90 days horizon Medalist Diversified is expected to generate 2.79 times less return on investment than Sotherly Hotels. But when comparing it to its historical volatility, Medalist Diversified Reit is 1.12 times less risky than Sotherly Hotels. It trades about 0.02 of its potential returns per unit of risk. Sotherly Hotels PR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,691 in Sotherly Hotels PR on October 20, 2024 and sell it today you would earn a total of 34.00 from holding Sotherly Hotels PR or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Medalist Diversified Reit vs. Sotherly Hotels PR
Performance |
| Timeline |
| Medalist Diversified Reit |
| Sotherly Hotels PR |
Medalist Diversified and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medalist Diversified and Sotherly Hotels
The main advantage of trading using opposite Medalist Diversified and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medalist Diversified 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.| Medalist Diversified vs. Medallion Bank PR | Medalist Diversified vs. Sotherly Hotels PR | Medalist Diversified vs. Sotherly Hotels Series |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |