Correlation Between Summit Hotel and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality Holdings, you can compare the effects of market volatilities on Summit Hotel and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and RCI Hospitality.
Diversification Opportunities for Summit Hotel and RCI Hospitality
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and RCI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Summit Hotel i.e., Summit Hotel and RCI Hospitality go up and down completely randomly.
Pair Corralation between Summit Hotel and RCI Hospitality
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 0.88 times more return on investment than RCI Hospitality. However, Summit Hotel Properties is 1.14 times less risky than RCI Hospitality. It trades about 0.05 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.02 per unit of risk. If you would invest 522.00 in Summit Hotel Properties on September 12, 2024 and sell it today you would earn a total of 167.00 from holding Summit Hotel Properties or generate 31.99% 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. RCI Hospitality Holdings
Performance |
| Timeline |
| Summit Hotel Properties |
| RCI Hospitality Holdings |
Summit Hotel and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and RCI Hospitality
The main advantage of trading using opposite Summit Hotel and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's 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 |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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