Correlation Between Aldel Financial and Service Properties

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

By analyzing existing cross correlation between Aldel Financial II and Service Properties Trust, you can compare the effects of market volatilities on Aldel Financial and Service Properties 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 Aldel Financial with a short position of Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Service Properties.

Diversification Opportunities for Aldel Financial and Service Properties

0.06

Correlation Coefficient

Aldel Financial  Service Properties

Significant diversification

The 3 months correlation between Aldel and Service is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Aldel Financial i.e., Aldel Financial and Service Properties go up and down completely randomly.

Pair Corralation between Aldel Financial and Service Properties

Given the investment horizon of 90 days Aldel Financial II is expected to under-perform the Service Properties. But the stock apears to be less risky and, when comparing its historical volatility, Aldel Financial II is 19.19 times less risky than Service Properties. The stock trades about -0.04 of its potential returns per unit of risk. The Service Properties Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Service Properties Trust on July 2, 2025 and sell it today you would earn a total of  21.00  from holding Service Properties Trust or generate 8.27% return on investment over 90 days.

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

Aldel Financial II  vs.  Service Properties Trust

Aldel Financial II

Risk-Adjusted Performance

Weakest

Over the last 90 days Aldel Financial II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Service Properties Trust

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Service Properties Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Service Properties may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Aldel Financial and Service Properties

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

The idea behind Aldel Financial II and Service Properties 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.