Correlation Between Ashford Hospitality and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality 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 Ashford Hospitality and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashford Hospitality Trust and Summit Hotel Properties, you can compare the effects of market volatilities on Ashford Hospitality 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 Ashford Hospitality with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Summit Hotel.
Diversification Opportunities for Ashford Hospitality and Summit Hotel
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and Summit is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust 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 Ashford Hospitality 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 Ashford Hospitality Trust 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 Ashford Hospitality i.e., Ashford Hospitality and Summit Hotel go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Summit Hotel
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Summit Hotel. In addition to that, Ashford Hospitality is 5.74 times more volatile than Summit Hotel Properties. It trades about -0.01 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.1 per unit of volatility. If you would invest 2,051 in Summit Hotel Properties on August 27, 2024 and sell it today you would earn a total of 24.00 from holding Summit Hotel Properties or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Summit Hotel Properties
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Summit Hotel Properties |
Ashford Hospitality and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Summit Hotel
The main advantage of trading using opposite Ashford Hospitality and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality 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.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Aspen Digital |
| Summit Hotel vs. Ashford Hospitality Trust | Summit Hotel vs. Braemar Hotels Resorts | Summit Hotel vs. Ashford Hospitality Trust | Summit Hotel vs. Ashford Hospitality 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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