Correlation Between Sotherly Hotels and TravelCenters

Can any of the company-specific risk be diversified away by investing in both Sotherly Hotels and TravelCenters 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 TravelCenters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sotherly Hotels Series and TravelCenters Of America, you can compare the effects of market volatilities on Sotherly Hotels and TravelCenters 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 TravelCenters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and TravelCenters.

Diversification Opportunities for Sotherly Hotels and TravelCenters

0.0

Correlation Coefficient

Sotherly Hotels  TravelCenters

Pay attention - limited upside

The 3 months correlation between Sotherly and TravelCenters is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels Series and TravelCenters Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelCenters Of America 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 Series are associated (or correlated) with TravelCenters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelCenters Of America has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and TravelCenters go up and down completely randomly.

Pair Corralation between Sotherly Hotels and TravelCenters

If you would invest  1,586  in Sotherly Hotels Series on December 30, 2024 and sell it today you would earn a total of  109.00  from holding Sotherly Hotels Series or generate 6.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sotherly Hotels Series  vs.  TravelCenters Of America

Sotherly Hotels Series

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels Series are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sotherly Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TravelCenters Of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days TravelCenters Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TravelCenters is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sotherly Hotels and TravelCenters

The main advantage of trading using opposite Sotherly Hotels and TravelCenters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels position performs unexpectedly, TravelCenters 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 TravelCenters will offset losses from the drop in TravelCenters' long position.

The idea behind Sotherly Hotels Series and TravelCenters Of America 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.