Correlation Between Spirent Communications and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Summit Hotel Properties, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Summit Hotel.
Diversification Opportunities for Spirent Communications and Summit Hotel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spirent and Summit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Summit Hotel go up and down completely randomly.
Pair Corralation between Spirent Communications and Summit Hotel
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the Summit Hotel. In addition to that, Spirent Communications is 1.33 times more volatile than Summit Hotel Properties. It trades about -0.08 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.08 per unit of volatility. If you would invest 645.00 in Summit Hotel Properties on October 12, 2024 and sell it today you would lose (15.00) from holding Summit Hotel Properties or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Spirent Communications plc vs. Summit Hotel Properties
Performance |
| Timeline |
| Spirent Communications |
| Summit Hotel Properties |
Spirent Communications and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Summit Hotel
The main advantage of trading using opposite Spirent Communications and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. MEDICAL FACILITIES NEW | Spirent Communications vs. GLOBUS MEDICAL A | Spirent Communications vs. Eidesvik Offshore ASA | Spirent Communications vs. MeVis Medical Solutions |
| Summit Hotel vs. FIRST SAVINGS FINL | Summit Hotel vs. Darden Restaurants | Summit Hotel vs. INTERSHOP Communications Aktiengesellschaft | Summit Hotel vs. Spirent Communications plc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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