Correlation Between Barings BDC and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Barings BDC 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 Barings BDC and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Summit Hotel Properties, you can compare the effects of market volatilities on Barings BDC 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 Barings BDC with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Summit Hotel.
Diversification Opportunities for Barings BDC and Summit Hotel
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and Summit is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC 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 Barings BDC 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 Barings BDC 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 Barings BDC i.e., Barings BDC and Summit Hotel go up and down completely randomly.
Pair Corralation between Barings BDC and Summit Hotel
Given the investment horizon of 90 days Barings BDC is expected to generate 1.38 times less return on investment than Summit Hotel. But when comparing it to its historical volatility, Barings BDC is 1.99 times less risky than Summit Hotel. It trades about 0.29 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 603.00 in Summit Hotel Properties on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Summit Hotel Properties or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. Summit Hotel Properties
Performance |
| Timeline |
| Barings BDC |
| Summit Hotel Properties |
Barings BDC and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Summit Hotel
The main advantage of trading using opposite Barings BDC and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC 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.| Barings BDC vs. Visa Class A | Barings BDC vs. Diamond Hill Investment | Barings BDC vs. Distoken Acquisition | Barings BDC vs. Associated Capital Group |
| Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. RLJ Lodging Trust |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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