Correlation Between Summit Hotel and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley, you can compare the effects of market volatilities on Summit Hotel and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Morgan Stanley.
Diversification Opportunities for Summit Hotel and Morgan Stanley
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Morgan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Summit Hotel i.e., Summit Hotel and Morgan Stanley go up and down completely randomly.
Pair Corralation between Summit Hotel and Morgan Stanley
Considering the 90-day investment horizon Summit Hotel is expected to generate 1.37 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Summit Hotel Properties is 1.28 times less risky than Morgan Stanley. It trades about 0.2 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 11,685 in Morgan Stanley on September 2, 2024 and sell it today you would earn a total of 1,476 from holding Morgan Stanley or generate 12.63% 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. Morgan Stanley
Performance |
| Timeline |
| Summit Hotel Properties |
| Morgan Stanley |
Summit Hotel and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Morgan Stanley
The main advantage of trading using opposite Summit Hotel and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. RLJ Lodging Trust |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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