Correlation Between Summit Hotel and Centerspace
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Centerspace 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 Centerspace 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 Centerspace, you can compare the effects of market volatilities on Summit Hotel and Centerspace 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 Centerspace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Centerspace.
Diversification Opportunities for Summit Hotel and Centerspace
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Centerspace is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace 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 Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of Summit Hotel i.e., Summit Hotel and Centerspace go up and down completely randomly.
Pair Corralation between Summit Hotel and Centerspace
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 1.22 times more return on investment than Centerspace. However, Summit Hotel is 1.22 times more volatile than Centerspace. It trades about 0.08 of its potential returns per unit of risk. Centerspace is currently generating about -0.14 per unit of risk. If you would invest 620.00 in Summit Hotel Properties on October 26, 2024 and sell it today you would earn a total of 53.00 from holding Summit Hotel Properties or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Centerspace
Performance |
| Timeline |
| Summit Hotel Properties |
| Centerspace |
Summit Hotel and Centerspace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Centerspace
The main advantage of trading using opposite Summit Hotel and Centerspace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Centerspace 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 Centerspace will offset losses from the drop in Centerspace'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 |
| Centerspace vs. BRT Realty Trust | Centerspace vs. Nexpoint Residential Trust | Centerspace vs. Veris Residential | Centerspace vs. Clipper Realty |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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