Correlation Between Lead Real and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Lead Real and Summit Hotel 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 Lead Real and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lead Real Estate and Summit Hotel Properties, you can compare the effects of market volatilities on Lead Real and Summit Hotel 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 Lead Real with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lead Real and Summit Hotel.
Diversification Opportunities for Lead Real and Summit Hotel
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lead and Summit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lead Real Estate and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and Lead Real 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 Lead Real Estate are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Lead Real i.e., Lead Real and Summit Hotel go up and down completely randomly.
Pair Corralation between Lead Real and Summit Hotel
Considering the 90-day investment horizon Lead Real Estate is expected to under-perform the Summit Hotel. In addition to that, Lead Real is 11.0 times more volatile than Summit Hotel Properties. It trades about -0.2 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.32 per unit of volatility. If you would invest 609.00 in Summit Hotel Properties on September 18, 2024 and sell it today you would earn a total of 81.00 from holding Summit Hotel Properties or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lead Real Estate vs. Summit Hotel Properties
Performance |
| Timeline |
| Lead Real Estate |
| Summit Hotel Properties |
Lead Real and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lead Real and Summit Hotel
The main advantage of trading using opposite Lead Real and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lead Real position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| Lead Real vs. Summit Hotel Properties | Lead Real vs. Morgan Stanley | Lead Real vs. Kite Realty Group | Lead Real vs. SEI Investments |
| Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. RLJ Lodging Trust |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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