Correlation Between Summit Hotel and Vestis
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on Summit Hotel and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Vestis.
Diversification Opportunities for Summit Hotel and Vestis
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Vestis is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Summit Hotel i.e., Summit Hotel and Vestis go up and down completely randomly.
Pair Corralation between Summit Hotel and Vestis
Considering the 90-day investment horizon Summit Hotel is expected to generate 2.15 times less return on investment than Vestis. But when comparing it to its historical volatility, Summit Hotel Properties is 1.86 times less risky than Vestis. It trades about 0.2 of its potential returns per unit of risk. Vestis is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Vestis on September 2, 2024 and sell it today you would earn a total of 268.00 from holding Vestis or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Vestis
Performance |
| Timeline |
| Summit Hotel Properties |
| Vestis |
Summit Hotel and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Vestis
The main advantage of trading using opposite Summit Hotel and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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