Correlation Between Summit Hotel and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Ashford Hospitality 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 Summit Hotel and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and Ashford Hospitality Trust, you can compare the effects of market volatilities on Summit Hotel and Ashford Hospitality 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 Summit Hotel with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Ashford Hospitality.
Diversification Opportunities for Summit Hotel and Ashford Hospitality
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Ashford is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Summit Hotel i.e., Summit Hotel and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Summit Hotel and Ashford Hospitality
Assuming the 90 days trading horizon Summit Hotel Properties is expected to under-perform the Ashford Hospitality. But the preferred stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 2.48 times less risky than Ashford Hospitality. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Ashford Hospitality Trust is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Ashford Hospitality Trust on October 25, 2024 and sell it today you would earn a total of 257.00 from holding Ashford Hospitality Trust or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Summit Hotel Properties |
| Ashford Hospitality Trust |
Summit Hotel and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Ashford Hospitality
The main advantage of trading using opposite Summit Hotel and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Ashford Hospitality 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 Ashford Hospitality will offset losses from the drop in Ashford Hospitality's long position.| Summit Hotel vs. Ashford Hospitality Trust | Summit Hotel vs. Braemar Hotels Resorts | Summit Hotel vs. Ashford Hospitality Trust | Summit Hotel vs. Ashford Hospitality Trust |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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