Correlation Between INVITATION HOMES and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Summit Hotel 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 INVITATION HOMES and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INVITATION HOMES DL and Summit Hotel Properties, you can compare the effects of market volatilities on INVITATION HOMES and Summit Hotel 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 INVITATION HOMES with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Summit Hotel.
Diversification Opportunities for INVITATION HOMES and Summit Hotel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INVITATION and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and INVITATION HOMES 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 INVITATION HOMES DL are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Summit Hotel go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Summit Hotel
Assuming the 90 days horizon INVITATION HOMES DL is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, INVITATION HOMES DL is 1.46 times less risky than Summit Hotel. The stock trades about -0.02 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 530.00 in Summit Hotel Properties on November 3, 2024 and sell it today you would earn a total of 110.00 from holding Summit Hotel Properties or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Summit Hotel Properties
Performance |
| Timeline |
| INVITATION HOMES |
| Summit Hotel Properties |
INVITATION HOMES and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Summit Hotel
The main advantage of trading using opposite INVITATION HOMES and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| INVITATION HOMES vs. EPSILON HEALTHCARE LTD | INVITATION HOMES vs. Acadia Healthcare | INVITATION HOMES vs. BRAEMAR HOTELS RES | INVITATION HOMES vs. INTERCONT HOTELS |
| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Park Hotels Resorts | Summit Hotel vs. Pebblebrook Hotel Trust |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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