Correlation Between Summit Hotel and AMREP
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and AMREP 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 AMREP 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 AMREP, you can compare the effects of market volatilities on Summit Hotel and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and AMREP.
Diversification Opportunities for Summit Hotel and AMREP
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and AMREP is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Summit Hotel i.e., Summit Hotel and AMREP go up and down completely randomly.
Pair Corralation between Summit Hotel and AMREP
Considering the 90-day investment horizon Summit Hotel is expected to generate 2.82 times less return on investment than AMREP. But when comparing it to its historical volatility, Summit Hotel Properties is 1.99 times less risky than AMREP. It trades about 0.13 of its potential returns per unit of risk. AMREP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,000 in AMREP on August 28, 2024 and sell it today you would earn a total of 541.00 from holding AMREP or generate 18.03% 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. AMREP
Performance |
| Timeline |
| Summit Hotel Properties |
| AMREP |
Summit Hotel and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and AMREP
The main advantage of trading using opposite Summit Hotel and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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