Correlation Between Sotherly Hotels and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Pebblebrook Hotel 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 Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Sotherly Hotels and Pebblebrook Hotel 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 Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Pebblebrook Hotel.
Diversification Opportunities for Sotherly Hotels and Pebblebrook Hotel
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sotherly and Pebblebrook is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and Pebblebrook Hotel Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pebblebrook Hotel Trust 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 Pebblebrook Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pebblebrook Hotel Trust has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Pebblebrook Hotel
Given the investment horizon of 90 days Sotherly Hotels is expected to under-perform the Pebblebrook Hotel. In addition to that, Sotherly Hotels is 1.43 times more volatile than Pebblebrook Hotel Trust. It trades about -0.03 of its total potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.0 per unit of volatility. If you would invest 1,514 in Pebblebrook Hotel Trust on August 28, 2024 and sell it today you would lose (141.00) from holding Pebblebrook Hotel Trust or give up 9.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotherly Hotels vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Sotherly Hotels |
| Pebblebrook Hotel Trust |
Sotherly Hotels and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Pebblebrook Hotel
The main advantage of trading using opposite Sotherly Hotels and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Pebblebrook Hotel 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 Pebblebrook Hotel will offset losses from the drop in Pebblebrook Hotel'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 |
| Pebblebrook Hotel vs. RLJ Lodging Trust | Pebblebrook Hotel vs. Sunstone Hotel Investors | Pebblebrook Hotel vs. Diamondrock Hospitality | Pebblebrook Hotel vs. Summit Hotel Properties |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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