Correlation Between Black Spade and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Black Spade 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 Black Spade and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Spade Acquisition and Summit Hotel Properties, you can compare the effects of market volatilities on Black Spade 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 Black Spade with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Spade and Summit Hotel.
Diversification Opportunities for Black Spade and Summit Hotel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Summit is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Black Spade Acquisition 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 Black Spade 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 Black Spade Acquisition 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 Black Spade i.e., Black Spade and Summit Hotel go up and down completely randomly.
Pair Corralation between Black Spade and Summit Hotel
Assuming the 90 days horizon Black Spade Acquisition is expected to generate 0.32 times more return on investment than Summit Hotel. However, Black Spade Acquisition is 3.1 times less risky than Summit Hotel. It trades about 0.11 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.09 per unit of risk. If you would invest 1,006 in Black Spade Acquisition on October 28, 2024 and sell it today you would earn a total of 7.00 from holding Black Spade Acquisition or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Spade Acquisition vs. Summit Hotel Properties
Performance |
| Timeline |
| Black Spade Acquisition |
| Summit Hotel Properties |
Black Spade and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Spade and Summit Hotel
The main advantage of trading using opposite Black Spade and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Spade 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.| Black Spade vs. dMY Squared Technology | Black Spade vs. YHN Acquisition I | Black Spade vs. YHN Acquisition I | Black Spade vs. CO2 Energy Transition |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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