Correlation Between Sotherly Hotels and Chatham Lodging
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Chatham Lodging 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 Chatham Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels PR and Chatham Lodging Trust, you can compare the effects of market volatilities on Sotherly Hotels and Chatham Lodging 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 Chatham Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Chatham Lodging.
Diversification Opportunities for Sotherly Hotels and Chatham Lodging
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sotherly and Chatham is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels PR and Chatham Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Lodging 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 PR are associated (or correlated) with Chatham Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Lodging Trust has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Chatham Lodging go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Chatham Lodging
Assuming the 90 days horizon Sotherly Hotels PR is expected to generate 0.76 times more return on investment than Chatham Lodging. However, Sotherly Hotels PR is 1.31 times less risky than Chatham Lodging. It trades about 0.0 of its potential returns per unit of risk. Chatham Lodging Trust is currently generating about -0.02 per unit of risk. If you would invest 1,828 in Sotherly Hotels PR on August 25, 2024 and sell it today you would lose (54.00) from holding Sotherly Hotels PR or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotherly Hotels PR vs. Chatham Lodging Trust
Performance |
| Timeline |
| Sotherly Hotels PR |
| Chatham Lodging Trust |
Sotherly Hotels and Chatham Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Chatham Lodging
The main advantage of trading using opposite Sotherly Hotels and Chatham Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Chatham Lodging 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 Chatham Lodging will offset losses from the drop in Chatham Lodging's long position.| Sotherly Hotels vs. Summit Hotel Properties | Sotherly Hotels vs. Pebblebrook Hotel Trust | Sotherly Hotels vs. DiamondRock Hospitality | Sotherly Hotels vs. Aquagold International |
| Chatham Lodging vs. Summit Hotel Properties | Chatham Lodging vs. RLJ Lodging Trust | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Whitestone REIT |
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
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |