Correlation Between Summit Hotel and Realty Income
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Realty Income 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 Realty Income 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 Realty Income, you can compare the effects of market volatilities on Summit Hotel and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Realty Income.
Diversification Opportunities for Summit Hotel and Realty Income
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Realty is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Summit Hotel i.e., Summit Hotel and Realty Income go up and down completely randomly.
Pair Corralation between Summit Hotel and Realty Income
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 1.25 times more return on investment than Realty Income. However, Summit Hotel is 1.25 times more volatile than Realty Income. It trades about -0.14 of its potential returns per unit of risk. Realty Income is currently generating about -0.27 per unit of risk. If you would invest 682.00 in Summit Hotel Properties on October 10, 2024 and sell it today you would lose (29.00) from holding Summit Hotel Properties or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Realty Income
Performance |
| Timeline |
| Summit Hotel Properties |
| Realty Income |
Summit Hotel and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Realty Income
The main advantage of trading using opposite Summit Hotel and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Summit Hotel vs. Regional Health Properties | Summit Hotel vs. SemiLEDS | Summit Hotel vs. SunLink Health Systems | Summit Hotel vs. Avalon Holdings |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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