Correlation Between Sotherly Hotels and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Park 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 Sotherly Hotels and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels and Park Hotels Resorts, you can compare the effects of market volatilities on Sotherly Hotels and Park 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 Sotherly Hotels with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Park Hotels.
Diversification Opportunities for Sotherly Hotels and Park Hotels
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sotherly and Park is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Park Hotels go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Park Hotels
Given the investment horizon of 90 days Sotherly Hotels is expected to under-perform the Park Hotels. In addition to that, Sotherly Hotels is 3.41 times more volatile than Park Hotels Resorts. It trades about -0.2 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.26 per unit of volatility. If you would invest 1,367 in Park Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 147.00 from holding Park Hotels Resorts or generate 10.75% 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. Park Hotels Resorts
Performance |
| Timeline |
| Sotherly Hotels |
| Park Hotels Resorts |
Sotherly Hotels and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Park Hotels
The main advantage of trading using opposite Sotherly Hotels and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' 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 |
| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. RLJ 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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