Correlation Between Playa Hotels and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Playa Hotels 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 Playa Hotels and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and Summit Hotel Properties, you can compare the effects of market volatilities on Playa Hotels 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 Playa Hotels with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Summit Hotel.
Diversification Opportunities for Playa Hotels and Summit Hotel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playa and Summit is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts 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 Playa Hotels 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 Playa Hotels Resorts 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 Playa Hotels i.e., Playa Hotels and Summit Hotel go up and down completely randomly.
Pair Corralation between Playa Hotels and Summit Hotel
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.17 times more return on investment than Summit Hotel. However, Playa Hotels is 1.17 times more volatile than Summit Hotel Properties. It trades about 0.22 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.2 per unit of risk. If you would invest 805.00 in Playa Hotels Resorts on August 27, 2024 and sell it today you would earn a total of 120.00 from holding Playa Hotels Resorts or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Summit Hotel Properties
Performance |
| Timeline |
| Playa Hotels Resorts |
| Summit Hotel Properties |
Playa Hotels and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Summit Hotel
The main advantage of trading using opposite Playa Hotels and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels 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.| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. ASHFORD HOSPITTRUST |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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