Correlation Between Summit Hotel and Regency Centers

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

Diversification Opportunities for Summit Hotel and Regency Centers

-0.45

Correlation Coefficient

Summit Hotel  Regency Centers

Very good diversification

The 3 months correlation between Summit and Regency is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers 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 Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Summit Hotel i.e., Summit Hotel and Regency Centers go up and down completely randomly.

Pair Corralation between Summit Hotel and Regency Centers

Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 2.67 times more return on investment than Regency Centers. However, Summit Hotel is 2.67 times more volatile than Regency Centers. It trades about 0.18 of its potential returns per unit of risk. Regency Centers is currently generating about 0.02 per unit of risk. If you would invest  406.00  in Summit Hotel Properties on May 1, 2025 and sell it today you would earn a total of  139.00  from holding Summit Hotel Properties or generate 34.24% return on investment over 90 days.

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

Summit Hotel Properties  vs.  Regency Centers

Summit Hotel Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 14 (%) 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.

Regency Centers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Regency Centers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Summit Hotel and Regency Centers

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

The idea behind Summit Hotel Properties and Regency Centers 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.