Correlation Between Titan Machinery and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Titan Machinery 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 Titan Machinery and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Summit Hotel Properties, you can compare the effects of market volatilities on Titan Machinery 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 Titan Machinery with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Summit Hotel.
Diversification Opportunities for Titan Machinery and Summit Hotel
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Titan and Summit is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery 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 Titan Machinery 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 Titan Machinery 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 Titan Machinery i.e., Titan Machinery and Summit Hotel go up and down completely randomly.
Pair Corralation between Titan Machinery and Summit Hotel
Assuming the 90 days horizon Titan Machinery is expected to under-perform the Summit Hotel. In addition to that, Titan Machinery is 1.91 times more volatile than Summit Hotel Properties. It trades about -0.05 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.04 per unit of volatility. If you would invest 574.00 in Summit Hotel Properties on September 20, 2024 and sell it today you would earn a total of 76.00 from holding Summit Hotel Properties or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. Summit Hotel Properties
Performance |
| Timeline |
| Titan Machinery |
| Summit Hotel Properties |
Titan Machinery and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Summit Hotel
The main advantage of trading using opposite Titan Machinery and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery 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.| Titan Machinery vs. WATSCO INC B | Titan Machinery vs. Indutrade AB | Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. SIVERS SEMICONDUCTORS AB |
| Summit Hotel vs. Titan Machinery | Summit Hotel vs. Sterling Construction | Summit Hotel vs. Hanison Construction Holdings | Summit Hotel vs. Dairy Farm International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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