Correlation Between DFS Furniture and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Summit Hotel Properties, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Summit Hotel.
Diversification Opportunities for DFS Furniture and Summit Hotel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and Summit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture 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 DFS Furniture 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 DFS Furniture 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 DFS Furniture i.e., DFS Furniture and Summit Hotel go up and down completely randomly.
Pair Corralation between DFS Furniture and Summit Hotel
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.4 times more return on investment than Summit Hotel. However, DFS Furniture is 1.4 times more volatile than Summit Hotel Properties. It trades about 0.06 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.08 per unit of risk. If you would invest 131.00 in DFS Furniture PLC on November 3, 2024 and sell it today you would earn a total of 25.00 from holding DFS Furniture PLC or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Summit Hotel Properties
Performance |
| Timeline |
| DFS Furniture PLC |
| Summit Hotel Properties |
DFS Furniture and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Summit Hotel
The main advantage of trading using opposite DFS Furniture and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. USU Software AG | DFS Furniture vs. VELA TECHNOLPLC LS 0001 | DFS Furniture vs. VITEC SOFTWARE GROUP | DFS Furniture vs. PSI Software AG |
| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Park Hotels Resorts | Summit Hotel vs. Pebblebrook Hotel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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