Correlation Between Summit Hotel and Above Food
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Above Food 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 Summit Hotel and Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and Above Food Ingredients, you can compare the effects of market volatilities on Summit Hotel and Above Food 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 Summit Hotel with a short position of Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Above Food.
Diversification Opportunities for Summit Hotel and Above Food
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Above is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Summit Hotel i.e., Summit Hotel and Above Food go up and down completely randomly.
Pair Corralation between Summit Hotel and Above Food
Considering the 90-day investment horizon Summit Hotel is expected to generate 1.88 times less return on investment than Above Food. But when comparing it to its historical volatility, Summit Hotel Properties is 5.38 times less risky than Above Food. It trades about 0.11 of its potential returns per unit of risk. Above Food Ingredients is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Above Food Ingredients on August 29, 2024 and sell it today you would lose (4.00) from holding Above Food Ingredients or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Above Food Ingredients
Performance |
| Timeline |
| Summit Hotel Properties |
| Above Food Ingredients |
Summit Hotel and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Above Food
The main advantage of trading using opposite Summit Hotel and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
| Above Food vs. Summit Hotel Properties | Above Food vs. Artisan Partners Asset | Above Food vs. Globalfoundries | Above Food vs. IPG Photonics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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