Correlation Between Service Properties and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Service Properties 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 Service Properties and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Properties Trust and Summit Hotel Properties, you can compare the effects of market volatilities on Service Properties 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 Service Properties with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Properties and Summit Hotel.
Diversification Opportunities for Service Properties and Summit Hotel
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Service and Summit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust 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 Service Properties 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 Service Properties Trust 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 Service Properties i.e., Service Properties and Summit Hotel go up and down completely randomly.
Pair Corralation between Service Properties and Summit Hotel
Considering the 90-day investment horizon Service Properties Trust is expected to under-perform the Summit Hotel. In addition to that, Service Properties is 1.36 times more volatile than Summit Hotel Properties. It trades about -0.05 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.04 per unit of volatility. If you would invest 1,470 in Summit Hotel Properties on September 2, 2024 and sell it today you would earn a total of 611.00 from holding Summit Hotel Properties or generate 41.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Service Properties Trust vs. Summit Hotel Properties
Performance |
| Timeline |
| Service Properties Trust |
| Summit Hotel Properties |
Service Properties and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service Properties and Summit Hotel
The main advantage of trading using opposite Service Properties and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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.| Service Properties vs. Aegon NV ADR | Service Properties vs. Balchem | Service Properties vs. Hawkins | Service Properties vs. Guangdong Investment Limited |
| Summit Hotel vs. Summit Hotel Properties | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. DiamondRock Hospitality |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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