Correlation Between Sotherly Hotels and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and Ashford Hospitality 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 Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels Pref and Ashford Hospitality Trust, you can compare the effects of market volatilities on Sotherly Hotels and Ashford Hospitality 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 Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and Ashford Hospitality.
Diversification Opportunities for Sotherly Hotels and Ashford Hospitality
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sotherly and Ashford is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels Pref and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality 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 Pref are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Sotherly Hotels and Ashford Hospitality
Assuming the 90 days horizon Sotherly Hotels Pref is expected to generate 0.71 times more return on investment than Ashford Hospitality. However, Sotherly Hotels Pref is 1.4 times less risky than Ashford Hospitality. It trades about -0.02 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about -0.1 per unit of risk. If you would invest 1,770 in Sotherly Hotels Pref on September 12, 2024 and sell it today you would lose (56.00) from holding Sotherly Hotels Pref or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotherly Hotels Pref vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Sotherly Hotels Pref |
| Ashford Hospitality Trust |
Sotherly Hotels and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and Ashford Hospitality
The main advantage of trading using opposite Sotherly Hotels and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, Ashford Hospitality 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 Ashford Hospitality will offset losses from the drop in Ashford Hospitality's long position.| Sotherly Hotels vs. Sotherly Hotels | Sotherly Hotels vs. Service Properties Trust | Sotherly Hotels vs. Braemar Hotel Resorts | Sotherly Hotels vs. Summit Hotel Properties |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Ashford Hospitality 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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