Correlation Between Summit Hotel and Equity Commonwealth
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Equity Commonwealth 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 Equity Commonwealth 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 Equity Commonwealth, you can compare the effects of market volatilities on Summit Hotel and Equity Commonwealth 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 Equity Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Equity Commonwealth.
Diversification Opportunities for Summit Hotel and Equity Commonwealth
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Equity is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Equity Commonwealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Commonwealth 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 Equity Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Commonwealth has no effect on the direction of Summit Hotel i.e., Summit Hotel and Equity Commonwealth go up and down completely randomly.
Pair Corralation between Summit Hotel and Equity Commonwealth
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 0.21 times more return on investment than Equity Commonwealth. However, Summit Hotel Properties is 4.72 times less risky than Equity Commonwealth. It trades about 0.03 of its potential returns per unit of risk. Equity Commonwealth is currently generating about -0.08 per unit of risk. If you would invest 623.00 in Summit Hotel Properties on December 5, 2024 and sell it today you would earn a total of 27.00 from holding Summit Hotel Properties or generate 4.33% 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. Equity Commonwealth
Performance |
| Timeline |
| Summit Hotel Properties |
| Equity Commonwealth |
Summit Hotel and Equity Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Equity Commonwealth
The main advantage of trading using opposite Summit Hotel and Equity Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Equity Commonwealth 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 Equity Commonwealth will offset losses from the drop in Equity Commonwealth's long position.| Summit Hotel vs. Diamondrock Hospitality | ||
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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