Correlation Between Empresa Distribuidora and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora 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 Empresa Distribuidora and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Distribuidora y and Summit Hotel Properties, you can compare the effects of market volatilities on Empresa Distribuidora 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 Empresa Distribuidora with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Summit Hotel.
Diversification Opportunities for Empresa Distribuidora and Summit Hotel
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empresa and Summit is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y 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 Empresa Distribuidora 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 Empresa Distribuidora y 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 Empresa Distribuidora i.e., Empresa Distribuidora and Summit Hotel go up and down completely randomly.
Pair Corralation between Empresa Distribuidora and Summit Hotel
Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 0.98 times more return on investment than Summit Hotel. However, Empresa Distribuidora y is 1.02 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 -0.48 per unit of risk. If you would invest 3,234 in Empresa Distribuidora y on January 8, 2025 and sell it today you would lose (827.00) from holding Empresa Distribuidora y or give up 25.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresa Distribuidora y vs. Summit Hotel Properties
Performance |
| Timeline |
| Empresa Distribuidora |
| Summit Hotel Properties |
Empresa Distribuidora and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Distribuidora and Summit Hotel
The main advantage of trading using opposite Empresa Distribuidora and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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.| Empresa Distribuidora vs. Centrais Electricas Brasileiras | Empresa Distribuidora vs. Enel Chile SA | Empresa Distribuidora vs. Korea Electric Power | Empresa Distribuidora vs. Genie Energy |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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