Correlation Between Summit Hotel and Portillos
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Portillos 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 Portillos 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 Portillos, you can compare the effects of market volatilities on Summit Hotel and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Portillos.
Diversification Opportunities for Summit Hotel and Portillos
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Portillos is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Summit Hotel i.e., Summit Hotel and Portillos go up and down completely randomly.
Pair Corralation between Summit Hotel and Portillos
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 0.72 times more return on investment than Portillos. However, Summit Hotel Properties is 1.39 times less risky than Portillos. It trades about 0.0 of its potential returns per unit of risk. Portillos is currently generating about -0.02 per unit of risk. If you would invest 741.00 in Summit Hotel Properties on November 7, 2024 and sell it today you would lose (78.00) from holding Summit Hotel Properties or give up 10.53% 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. Portillos
Performance |
| Timeline |
| Summit Hotel Properties |
| Portillos |
Summit Hotel and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Portillos
The main advantage of trading using opposite Summit Hotel and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' 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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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