Correlation Between Summit Hotel and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Host 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 Host 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 Host Hotels Resorts, you can compare the effects of market volatilities on Summit Hotel and Host 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Host Hotels.
Diversification Opportunities for Summit Hotel and Host Hotels
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Summit and Host is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Summit Hotel i.e., Summit Hotel and Host Hotels go up and down completely randomly.
Pair Corralation between Summit Hotel and Host Hotels
Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Host Hotels. In addition to that, Summit Hotel is 1.28 times more volatile than Host Hotels Resorts. It trades about -0.01 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.02 per unit of volatility. If you would invest 1,596 in Host Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 229.00 from holding Host Hotels Resorts or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Host Hotels Resorts
Performance |
| Timeline |
| Summit Hotel Properties |
| Host Hotels Resorts |
Summit Hotel and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Host Hotels
The main advantage of trading using opposite Summit Hotel and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' 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 |
| Host Hotels vs. Service Properties Trust | Host Hotels vs. Diamondrock Hospitality | Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Ryman Hospitality Properties |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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