Correlation Between Summit Hotel and MIRAMAR HOTEL

Can any of the company-specific risk be diversified away by investing in both Summit Hotel and MIRAMAR 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 Summit Hotel and MIRAMAR HOTEL 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 MIRAMAR HOTEL INV, you can compare the effects of market volatilities on Summit Hotel and MIRAMAR 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 Summit Hotel with a short position of MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and MIRAMAR HOTEL.

Diversification Opportunities for Summit Hotel and MIRAMAR HOTEL

0.16

Correlation Coefficient

Summit Hotel  MIRAMAR HOTEL

Average diversification

The 3 months correlation between Summit and MIRAMAR is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV 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 MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of Summit Hotel i.e., Summit Hotel and MIRAMAR HOTEL go up and down completely randomly.

Pair Corralation between Summit Hotel and MIRAMAR HOTEL

Assuming the 90 days horizon Summit Hotel is expected to generate 7.55 times less return on investment than MIRAMAR HOTEL. But when comparing it to its historical volatility, Summit Hotel Properties is 1.54 times less risky than MIRAMAR HOTEL. It trades about 0.03 of its potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  88.00  in MIRAMAR HOTEL INV on September 2, 2024 and sell it today you would earn a total of  24.00  from holding MIRAMAR HOTEL INV or generate 27.27% return on investment over 90 days.

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

Summit Hotel Properties  vs.  MIRAMAR HOTEL INV

Summit Hotel Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Summit Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MIRAMAR HOTEL INV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MIRAMAR HOTEL INV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, MIRAMAR HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Hotel and MIRAMAR HOTEL

The main advantage of trading using opposite Summit Hotel and MIRAMAR HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, MIRAMAR 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 MIRAMAR HOTEL will offset losses from the drop in MIRAMAR HOTEL's long position.

The idea behind Summit Hotel Properties and MIRAMAR HOTEL INV 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.