Correlation Between Sotherly Hotels and ATT
Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotherly Hotels and ATT Inc, you can compare the effects of market volatilities on Sotherly Hotels and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and ATT.
Diversification Opportunities for Sotherly Hotels and ATT
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sotherly and ATT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and ATT go up and down completely randomly.
Pair Corralation between Sotherly Hotels and ATT
Given the investment horizon of 90 days Sotherly Hotels is expected to under-perform the ATT. In addition to that, Sotherly Hotels is 2.42 times more volatile than ATT Inc. It trades about -0.1 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.02 per unit of volatility. If you would invest 1,690 in ATT Inc on January 26, 2024 and sell it today you would lose (9.00) from holding ATT Inc or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sotherly Hotels vs. ATT Inc
Performance |
| Timeline |
| Sotherly Hotels |
| ATT Inc |
Sotherly Hotels and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotherly Hotels and ATT
The main advantage of trading using opposite Sotherly Hotels and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Sotherly Hotels vs. RLJ Lodging Trust | Sotherly Hotels vs. Sunstone Hotel Investors | Sotherly Hotels vs. Ryman Hospitality Properties |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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