Correlation Between Summit Hotel and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Advanced Micro 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 Advanced Micro 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 Advanced Micro Devices, you can compare the effects of market volatilities on Summit Hotel and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Advanced Micro.
Diversification Opportunities for Summit Hotel and Advanced Micro
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Advanced is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Summit Hotel i.e., Summit Hotel and Advanced Micro go up and down completely randomly.
Pair Corralation between Summit Hotel and Advanced Micro
Considering the 90-day investment horizon Summit Hotel is expected to generate 2.48 times less return on investment than Advanced Micro. But when comparing it to its historical volatility, Summit Hotel Properties is 1.5 times less risky than Advanced Micro. It trades about 0.01 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,548 in Advanced Micro Devices on November 27, 2024 and sell it today you would earn a total of 1,263 from holding Advanced Micro Devices or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Advanced Micro Devices
Performance |
| Timeline |
| Summit Hotel Properties |
| Advanced Micro Devices |
Summit Hotel and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Advanced Micro
The main advantage of trading using opposite Summit Hotel and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro'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 |
| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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