Correlation Between OFFICE DEPOT and Sotherly Hotels

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

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

Diversification Opportunities for OFFICE DEPOT and Sotherly Hotels

0.0

Correlation Coefficient

OFFICE DEPOT  Sotherly Hotels

Pay attention - limited upside

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

Pair Corralation between OFFICE DEPOT and Sotherly Hotels

If you would invest  70.00  in Sotherly Hotels on April 10, 2025 and sell it today you would earn a total of  6.00  from holding Sotherly Hotels or generate 8.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

OFFICE DEPOT  vs.  Sotherly Hotels

OFFICE DEPOT

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFFICE DEPOT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, OFFICE DEPOT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sotherly Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sotherly Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OFFICE DEPOT and Sotherly Hotels

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

The idea behind OFFICE DEPOT and Sotherly Hotels 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.