Correlation Between Sotherly Hotels and Diamondrock Hospitality
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Diamondrock 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 Diamondrock 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 Diamondrock Hospitality, you can compare the effects of market volatilities on Sotherly Hotels and Diamondrock 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 Diamondrock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Diamondrock Hospitality.
Diversification Opportunities for Sotherly Hotels and Diamondrock Hospitality
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sotherly and Diamondrock is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and Diamondrock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondrock Hospitality 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 Diamondrock Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondrock Hospitality has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Diamondrock Hospitality go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Diamondrock Hospitality
Given the investment horizon of 90 days Sotherly Hotels is expected to under-perform the Diamondrock Hospitality. In addition to that, Sotherly Hotels is 2.11 times more volatile than Diamondrock Hospitality. It trades about -0.03 of its total potential returns per unit of risk. Diamondrock Hospitality is currently generating about 0.04 per unit of volatility. If you would invest 825.00 in Diamondrock Hospitality on August 24, 2024 and sell it today you would earn a total of 92.00 from holding Diamondrock Hospitality or generate 11.15% 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. Diamondrock Hospitality
Performance |
| Timeline |
| Sotherly Hotels |
| Diamondrock Hospitality |
Sotherly Hotels and Diamondrock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Diamondrock Hospitality
The main advantage of trading using opposite Sotherly Hotels and Diamondrock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Diamondrock 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 Diamondrock Hospitality will offset losses from the drop in Diamondrock Hospitality's long position.| Sotherly Hotels vs. Summit Hotel Properties | Sotherly Hotels vs. Diamondrock Hospitality | Sotherly Hotels vs. RLJ Lodging Trust | Sotherly Hotels vs. Chatham Lodging Trust |
| Diamondrock Hospitality vs. Summit Hotel Properties | Diamondrock Hospitality vs. RLJ Lodging Trust | Diamondrock Hospitality vs. Pebblebrook Hotel Trust | Diamondrock Hospitality vs. Sunstone Hotel Investors |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |