Correlation Between Alliance Entertainment and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Alliance Entertainment 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 Alliance Entertainment and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Entertainment Holding and Summit Hotel Properties, you can compare the effects of market volatilities on Alliance Entertainment 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 Alliance Entertainment with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Entertainment and Summit Hotel.
Diversification Opportunities for Alliance Entertainment and Summit Hotel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alliance and Summit is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Entertainment Holding 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 Alliance Entertainment 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 Alliance Entertainment Holding 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 Alliance Entertainment i.e., Alliance Entertainment and Summit Hotel go up and down completely randomly.
Pair Corralation between Alliance Entertainment and Summit Hotel
Given the investment horizon of 90 days Alliance Entertainment Holding is expected to generate 2.46 times more return on investment than Summit Hotel. However, Alliance Entertainment is 2.46 times more volatile than Summit Hotel Properties. It trades about 0.12 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.17 per unit of risk. If you would invest 436.00 in Alliance Entertainment Holding on September 4, 2024 and sell it today you would earn a total of 51.00 from holding Alliance Entertainment Holding or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Entertainment Holding vs. Summit Hotel Properties
Performance |
| Timeline |
| Alliance Entertainment |
| Summit Hotel Properties |
Alliance Entertainment and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Entertainment and Summit Hotel
The main advantage of trading using opposite Alliance Entertainment and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Entertainment 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.| Alliance Entertainment vs. The Chefs Warehouse | Alliance Entertainment vs. G Willi Food International | Alliance Entertainment vs. SpartanNash Co | Alliance Entertainment vs. Calavo Growers |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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