Correlation Between Summit Hotel and AdCapital
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and AdCapital 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 AdCapital 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 AdCapital AG, you can compare the effects of market volatilities on Summit Hotel and AdCapital 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 AdCapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and AdCapital.
Diversification Opportunities for Summit Hotel and AdCapital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and AdCapital is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG 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 AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of Summit Hotel i.e., Summit Hotel and AdCapital go up and down completely randomly.
Pair Corralation between Summit Hotel and AdCapital
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 1.32 times more return on investment than AdCapital. However, Summit Hotel is 1.32 times more volatile than AdCapital AG. It trades about 0.17 of its potential returns per unit of risk. AdCapital AG is currently generating about -0.02 per unit of risk. If you would invest 602.00 in Summit Hotel Properties on September 13, 2024 and sell it today you would earn a total of 48.00 from holding Summit Hotel Properties or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. AdCapital AG
Performance |
| Timeline |
| Summit Hotel Properties |
| AdCapital AG |
Summit Hotel and AdCapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and AdCapital
The main advantage of trading using opposite Summit Hotel and AdCapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, AdCapital 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 AdCapital will offset losses from the drop in AdCapital's long position.| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Xenia Hotels Resorts | Summit Hotel vs. ASHFORD HOSPITTRUST |
| AdCapital vs. Hyatt Hotels | AdCapital vs. Summit Hotel Properties | AdCapital vs. Xenia Hotels Resorts | AdCapital vs. QINGCI GAMES INC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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