Correlation Between Summit Hotel and Braemar Hotels
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Braemar 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 Summit Hotel and Braemar Hotels 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 Braemar Hotels Resorts, you can compare the effects of market volatilities on Summit Hotel and Braemar 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 Summit Hotel with a short position of Braemar Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Braemar Hotels.
Diversification Opportunities for Summit Hotel and Braemar Hotels
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Braemar is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Braemar Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotels Resorts 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 Braemar Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotels Resorts has no effect on the direction of Summit Hotel i.e., Summit Hotel and Braemar Hotels go up and down completely randomly.
Pair Corralation between Summit Hotel and Braemar Hotels
Assuming the 90 days trading horizon Summit Hotel Properties is expected to under-perform the Braemar Hotels. But the preferred stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 1.37 times less risky than Braemar Hotels. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Braemar Hotels Resorts is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,366 in Braemar Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 32.00 from holding Braemar Hotels Resorts or generate 2.34% 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. Braemar Hotels Resorts
Performance |
| Timeline |
| Summit Hotel Properties |
| Braemar Hotels Resorts |
Summit Hotel and Braemar Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Braemar Hotels
The main advantage of trading using opposite Summit Hotel and Braemar Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Braemar 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 Braemar Hotels will offset losses from the drop in Braemar Hotels' 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 |
| Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Braemar Hotels Resorts | Braemar Hotels 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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