Correlation Between Apartment Investment and Summit Hotel

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

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

Diversification Opportunities for Apartment Investment and Summit Hotel

0.91

Correlation Coefficient

Apartment Investment  Summit Hotel

Almost no diversification

The 3 months correlation between Apartment and Summit is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and 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 Apartment Investment 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 Apartment Investment and 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 Apartment Investment i.e., Apartment Investment and Summit Hotel go up and down completely randomly.

Pair Corralation between Apartment Investment and Summit Hotel

Considering the 90-day investment horizon Apartment Investment is expected to generate 4.7 times less return on investment than Summit Hotel. But when comparing it to its historical volatility, Apartment Investment and is 2.22 times less risky than Summit Hotel. It trades about 0.06 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  417.00  in Summit Hotel Properties on May 5, 2025 and sell it today you would earn a total of  86.00  from holding Summit Hotel Properties or generate 20.62% return on investment over 90 days.

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

Apartment Investment and  vs.  Summit Hotel Properties

Apartment Investment and

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Summit Hotel Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Summit Hotel displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apartment Investment and Summit Hotel

The main advantage of trading using opposite Apartment Investment and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apartment Investment 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 Apartment Investment and 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.