Correlation Between Granite Construction and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Summit Hotel Properties, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Summit Hotel.
Diversification Opportunities for Granite Construction and Summit Hotel
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Granite and Summit is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction 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 Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Summit Hotel go up and down completely randomly.
Pair Corralation between Granite Construction and Summit Hotel
Assuming the 90 days trading horizon Granite Construction is expected to generate 1.09 times more return on investment than Summit Hotel. However, Granite Construction is 1.09 times more volatile than Summit Hotel Properties. It trades about 0.13 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.02 per unit of risk. If you would invest 3,559 in Granite Construction on September 2, 2024 and sell it today you would earn a total of 5,691 from holding Granite Construction or generate 159.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. Summit Hotel Properties
Performance |
| Timeline |
| Granite Construction |
| Summit Hotel Properties |
Granite Construction and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Summit Hotel
The main advantage of trading using opposite Granite Construction and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| Summit Hotel vs. Ubisoft Entertainment SA | Summit Hotel vs. Tower One Wireless | Summit Hotel vs. Consolidated Communications Holdings | Summit Hotel vs. Hollywood Bowl Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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