Correlation Between Sotherly Hotels and Healthcare Trust
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Healthcare Trust 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 Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels Series and Healthcare Trust PR, you can compare the effects of market volatilities on Sotherly Hotels and Healthcare Trust 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 Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Healthcare Trust.
Diversification Opportunities for Sotherly Hotels and Healthcare Trust
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sotherly and Healthcare is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels Series and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare 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 Series are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Healthcare Trust go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Healthcare Trust
Assuming the 90 days horizon Sotherly Hotels is expected to generate 2.17 times less return on investment than Healthcare Trust. In addition to that, Sotherly Hotels is 1.01 times more volatile than Healthcare Trust PR. It trades about 0.13 of its total potential returns per unit of risk. Healthcare Trust PR is currently generating about 0.29 per unit of volatility. If you would invest 1,433 in Healthcare Trust PR on November 1, 2024 and sell it today you would earn a total of 92.00 from holding Healthcare Trust PR or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.0% |
| Values | Daily Returns |
Sotherly Hotels Series vs. Healthcare Trust PR
Performance |
| Timeline |
| Sotherly Hotels Series |
| Healthcare Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sotherly Hotels and Healthcare Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Healthcare Trust
The main advantage of trading using opposite Sotherly Hotels and Healthcare Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Healthcare Trust 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 Healthcare Trust will offset losses from the drop in Healthcare Trust's long position.| Sotherly Hotels vs. RLJ Lodging Trust | Sotherly Hotels vs. Diamondrock Hospitality | Sotherly Hotels vs. Chatham Lodging Trust | Sotherly Hotels vs. Xenia Hotels Resorts |
| Healthcare Trust vs. Gladstone Commercial Corp | Healthcare Trust vs. Heartland Financial USA | Healthcare Trust vs. Sotherly Hotels PR | Healthcare Trust vs. B Riley Financial |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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