Correlation Between Sotherly Hotels and Medallion Bank
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Medallion Bank 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 Medallion Bank 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 Medallion Bank PR, you can compare the effects of market volatilities on Sotherly Hotels and Medallion Bank 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 Medallion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Medallion Bank.
Diversification Opportunities for Sotherly Hotels and Medallion Bank
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sotherly and Medallion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels PR and Medallion Bank PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Bank PR 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 Medallion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Bank PR has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Medallion Bank go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Medallion Bank
Assuming the 90 days horizon Sotherly Hotels PR is expected to under-perform the Medallion Bank. In addition to that, Sotherly Hotels is 2.72 times more volatile than Medallion Bank PR. It trades about -0.07 of its total potential returns per unit of risk. Medallion Bank PR is currently generating about 0.04 per unit of volatility. If you would invest 2,529 in Medallion Bank PR on November 1, 2024 and sell it today you would earn a total of 16.00 from holding Medallion Bank PR or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sotherly Hotels PR vs. Medallion Bank PR
Performance |
| Timeline |
| Sotherly Hotels PR |
| Medallion Bank PR |
Sotherly Hotels and Medallion Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Medallion Bank
The main advantage of trading using opposite Sotherly Hotels and Medallion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Medallion Bank 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 Medallion Bank will offset losses from the drop in Medallion Bank's long position.| Sotherly Hotels vs. Sotherly Hotels | Sotherly Hotels vs. Braemar Hotel Resorts | Sotherly Hotels vs. Summit Hotel Properties | Sotherly Hotels vs. Service Properties 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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