Correlation Between Summit Hotel and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Summit Hotel and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Arrow Electronics.
Diversification Opportunities for Summit Hotel and Arrow Electronics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Arrow is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Summit Hotel i.e., Summit Hotel and Arrow Electronics go up and down completely randomly.
Pair Corralation between Summit Hotel and Arrow Electronics
Considering the 90-day investment horizon Summit Hotel is expected to generate 2.26 times less return on investment than Arrow Electronics. In addition to that, Summit Hotel is 1.27 times more volatile than Arrow Electronics. It trades about 0.01 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.02 per unit of volatility. If you would invest 10,619 in Arrow Electronics on September 5, 2024 and sell it today you would earn a total of 1,509 from holding Arrow Electronics or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Arrow Electronics
Performance |
| Timeline |
| Summit Hotel Properties |
| Arrow Electronics |
Summit Hotel and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Arrow Electronics
The main advantage of trading using opposite Summit Hotel and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection | Arrow Electronics vs. Aquagold International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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