Correlation Between Analog Devices and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Summit Hotel Properties, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Summit Hotel.
Diversification Opportunities for Analog Devices and Summit Hotel
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Summit is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices 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 Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Summit Hotel go up and down completely randomly.
Pair Corralation between Analog Devices and Summit Hotel
Considering the 90-day investment horizon Analog Devices is expected to generate 1.35 times more return on investment than Summit Hotel. However, Analog Devices is 1.35 times more volatile than Summit Hotel Properties. It trades about 0.17 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.15 per unit of risk. If you would invest 21,806 in Analog Devices on October 26, 2024 and sell it today you would earn a total of 1,029 from holding Analog Devices or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Summit Hotel Properties
Performance |
| Timeline |
| Analog Devices |
| Summit Hotel Properties |
Analog Devices and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Summit Hotel
The main advantage of trading using opposite Analog Devices and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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