Correlation Between AECOM TECHNOLOGY and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Summit Hotel Properties, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Summit Hotel.
Diversification Opportunities for AECOM TECHNOLOGY and Summit Hotel
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and Summit is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Summit Hotel go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Summit Hotel
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.72 times more return on investment than Summit Hotel. However, AECOM TECHNOLOGY is 1.38 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 -0.05 per unit of risk. If you would invest 10,374 in AECOM TECHNOLOGY on October 26, 2024 and sell it today you would earn a total of 226.00 from holding AECOM TECHNOLOGY or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Summit Hotel Properties
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Summit Hotel Properties |
AECOM TECHNOLOGY and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Summit Hotel
The main advantage of trading using opposite AECOM TECHNOLOGY and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. CARDINAL HEALTH | AECOM TECHNOLOGY vs. AGNC INVESTMENT | AECOM TECHNOLOGY vs. Japan Asia Investment | AECOM TECHNOLOGY vs. Cardinal Health |
| Summit Hotel vs. Micron Technology | Summit Hotel vs. AECOM TECHNOLOGY | Summit Hotel vs. GEAR4MUSIC LS 10 | Summit Hotel vs. Western Copper and |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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