Correlation Between Summit Hotel and CENTURIA OFFICE

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

Diversification Opportunities for Summit Hotel and CENTURIA OFFICE

-0.39

Correlation Coefficient

Summit Hotel  CENTURIA OFFICE

Very good diversification

The 3 months correlation between Summit and CENTURIA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT 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 CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of Summit Hotel i.e., Summit Hotel and CENTURIA OFFICE go up and down completely randomly.

Pair Corralation between Summit Hotel and CENTURIA OFFICE

Assuming the 90 days horizon Summit Hotel Properties is expected to generate 1.62 times more return on investment than CENTURIA OFFICE. However, Summit Hotel is 1.62 times more volatile than CENTURIA OFFICE REIT. It trades about 0.2 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.02 per unit of risk. If you would invest  338.00  in Summit Hotel Properties on April 25, 2025 and sell it today you would earn a total of  136.00  from holding Summit Hotel Properties or generate 40.24% return on investment over 90 days.

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

Summit Hotel Properties  vs.  CENTURIA OFFICE REIT

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Summit Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Weak

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

Pair Trading with Summit Hotel and CENTURIA OFFICE

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

The idea behind Summit Hotel Properties and CENTURIA OFFICE REIT 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.