Correlation Between Summit Hotel and Air Lease
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on Summit Hotel and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Air Lease.
Diversification Opportunities for Summit Hotel and Air Lease
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Air is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Summit Hotel i.e., Summit Hotel and Air Lease go up and down completely randomly.
Pair Corralation between Summit Hotel and Air Lease
Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Air Lease. In addition to that, Summit Hotel is 1.16 times more volatile than Air Lease. It trades about 0.0 of its total potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of volatility. If you would invest 3,708 in Air Lease on September 2, 2024 and sell it today you would earn a total of 1,382 from holding Air Lease or generate 37.27% 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. Air Lease
Performance |
| Timeline |
| Summit Hotel Properties |
| Air Lease |
Summit Hotel and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Air Lease
The main advantage of trading using opposite Summit Hotel and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. RLJ Lodging Trust |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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