Correlation Between Summit Hotel and Whitestone REIT
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Whitestone REIT 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 Whitestone REIT 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 Whitestone REIT, you can compare the effects of market volatilities on Summit Hotel and Whitestone REIT 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 Whitestone REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Whitestone REIT.
Diversification Opportunities for Summit Hotel and Whitestone REIT
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Whitestone is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT 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 Whitestone REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitestone REIT has no effect on the direction of Summit Hotel i.e., Summit Hotel and Whitestone REIT go up and down completely randomly.
Pair Corralation between Summit Hotel and Whitestone REIT
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 1.96 times more return on investment than Whitestone REIT. However, Summit Hotel is 1.96 times more volatile than Whitestone REIT. It trades about 0.13 of its potential returns per unit of risk. Whitestone REIT is currently generating about 0.17 per unit of risk. If you would invest 620.00 in Summit Hotel Properties on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Summit Hotel Properties or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Whitestone REIT
Performance |
| Timeline |
| Summit Hotel Properties |
| Whitestone REIT |
Summit Hotel and Whitestone REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Whitestone REIT
The main advantage of trading using opposite Summit Hotel and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Whitestone REIT 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 Whitestone REIT will offset losses from the drop in Whitestone REIT'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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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