Correlation Between Sotherly Hotels and Apple

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

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

Diversification Opportunities for Sotherly Hotels and Apple

-0.33

Correlation Coefficient

Sotherly Hotels  Apple

Very good diversification

The 3 months correlation between Sotherly and Apple is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and Apple go up and down completely randomly.

Pair Corralation between Sotherly Hotels and Apple

Assuming the 90 days horizon Sotherly Hotels is expected to generate 2.37 times more return on investment than Apple. However, Sotherly Hotels is 2.37 times more volatile than Apple Inc. It trades about 0.1 of its potential returns per unit of risk. Apple Inc is currently generating about 0.05 per unit of risk. If you would invest  60.00  in Sotherly Hotels on April 20, 2025 and sell it today you would earn a total of  13.00  from holding Sotherly Hotels or generate 21.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sotherly Hotels  vs.  Apple Inc

Sotherly Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sotherly Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sotherly Hotels and Apple

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

The idea behind Sotherly Hotels and Apple Inc 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.