Correlation Between Simon Property and Hersha Hospitality
Can any of the company-specific risk be diversified away by investing in both Simon Property and Hersha 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 Simon Property and Hersha Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Hersha Hospitality Trust, you can compare the effects of market volatilities on Simon Property and Hersha 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 Simon Property with a short position of Hersha Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Hersha Hospitality.
Diversification Opportunities for Simon Property and Hersha Hospitality
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Simon and Hersha is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Hersha Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hersha Hospitality Trust and Simon Property 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 Simon Property Group are associated (or correlated) with Hersha Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hersha Hospitality Trust has no effect on the direction of Simon Property i.e., Simon Property and Hersha Hospitality go up and down completely randomly.
Pair Corralation between Simon Property and Hersha Hospitality
If you would invest 999.00 in Hersha Hospitality Trust on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Hersha Hospitality Trust or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Simon Property Group vs. Hersha Hospitality Trust
Performance |
| Timeline |
| Simon Property Group |
| Hersha Hospitality Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Simon Property and Hersha Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Hersha Hospitality
The main advantage of trading using opposite Simon Property and Hersha Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Hersha 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 Hersha Hospitality will offset losses from the drop in Hersha Hospitality's long position.The idea behind Simon Property Group and Hersha Hospitality Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hersha Hospitality vs. RLJ Lodging Trust | Hersha Hospitality vs. Sunstone Hotel Investors | Hersha Hospitality vs. Pebblebrook Hotel Trust | Hersha Hospitality vs. Summit Hotel 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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