Correlation Between WPP - and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both WPP - 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 WPP - and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP Dusseldorf and Summit Hotel Properties, you can compare the effects of market volatilities on WPP - 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 WPP - with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP - and Summit Hotel.
Diversification Opportunities for WPP - and Summit Hotel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WPP and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WPP Dusseldorf 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 WPP - 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 WPP Dusseldorf 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 WPP - i.e., WPP - and Summit Hotel go up and down completely randomly.
Pair Corralation between WPP - and Summit Hotel
Assuming the 90 days trading horizon WPP Dusseldorf is expected to generate 0.85 times more return on investment than Summit Hotel. However, WPP Dusseldorf is 1.18 times less risky than Summit Hotel. It trades about 0.07 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.03 per unit of risk. If you would invest 801.00 in WPP Dusseldorf on September 3, 2024 and sell it today you would earn a total of 229.00 from holding WPP Dusseldorf or generate 28.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP Dusseldorf vs. Summit Hotel Properties
Performance |
| Timeline |
| WPP Dusseldorf |
| Summit Hotel Properties |
WPP - and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP - and Summit Hotel
The main advantage of trading using opposite WPP - and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP - 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.| WPP - vs. China Resources Beer | WPP - vs. CARSALESCOM | WPP - vs. Caltagirone SpA | WPP - vs. Motorcar Parts of |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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