Correlation Between Addus HomeCare and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare 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 Addus HomeCare and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Summit Hotel Properties, you can compare the effects of market volatilities on Addus HomeCare 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 Addus HomeCare with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Summit Hotel.
Diversification Opportunities for Addus HomeCare and Summit Hotel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and Summit is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare i.e., Addus HomeCare and Summit Hotel go up and down completely randomly.
Pair Corralation between Addus HomeCare and Summit Hotel
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 1.12 times less risky than Summit Hotel. The stock trades about -0.06 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 620.00 in Summit Hotel Properties on August 29, 2024 and sell it today you would earn a total of 34.00 from holding Summit Hotel Properties or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Summit Hotel Properties
Performance |
| Timeline |
| Addus HomeCare |
| Summit Hotel Properties |
Addus HomeCare and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Summit Hotel
The main advantage of trading using opposite Addus HomeCare and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare 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.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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