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 Direct, 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
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and Morgan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct 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 Direct 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 Properties is expected to generate 1.98 times more return on investment than Morgan Stanley. However, Summit Hotel is 1.98 times more volatile than Morgan Stanley Direct. It trades about 0.32 of its potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.2 per unit of risk. If you would invest 609.00 in Summit Hotel Properties on September 18, 2024 and sell it today you would earn a total of 81.00 from holding Summit Hotel Properties or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Morgan Stanley Direct
Performance |
| Timeline |
| Summit Hotel Properties |
| Morgan Stanley Direct |
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.The idea behind Summit Hotel Properties and Morgan Stanley Direct pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Morgan Stanley vs. Mesa Air Group | Morgan Stanley vs. Air Transport Services | Morgan Stanley vs. SmartStop Self Storage | Morgan Stanley vs. Q2 Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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