Correlation Between Agree Realty and Summit Hotel

Can any of the company-specific risk be diversified away by investing in both Agree Realty 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 Agree Realty and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agree Realty and Summit Hotel Properties, you can compare the effects of market volatilities on Agree Realty 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 Agree Realty with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agree Realty and Summit Hotel.

Diversification Opportunities for Agree Realty and Summit Hotel

-0.75

Correlation Coefficient

Agree Realty  Summit Hotel

Pay attention - limited upside

The 3 months correlation between Agree and Summit is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty 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 Agree Realty 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Summit Hotel go up and down completely randomly.

Pair Corralation between Agree Realty and Summit Hotel

Considering the 90-day investment horizon Agree Realty is expected to generate 0.61 times more return on investment than Summit Hotel. However, Agree Realty is 1.65 times less risky than Summit Hotel. It trades about 0.14 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.18 per unit of risk. If you would invest  6,918  in Agree Realty on December 28, 2024 and sell it today you would earn a total of  682.00  from holding Agree Realty or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Agree Realty  vs.  Summit Hotel Properties

Agree Realty

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agree Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Agree Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Summit Hotel Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Summit Hotel Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agree Realty and Summit Hotel

The main advantage of trading using opposite Agree Realty and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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.

The idea behind Agree Realty and Summit Hotel Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..