Correlation Between Summit Hotel and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Biglari Holdings 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 Biglari Holdings 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 Biglari Holdings, you can compare the effects of market volatilities on Summit Hotel and Biglari Holdings 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 Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Biglari Holdings.
Diversification Opportunities for Summit Hotel and Biglari Holdings
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Biglari is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Summit Hotel i.e., Summit Hotel and Biglari Holdings go up and down completely randomly.
Pair Corralation between Summit Hotel and Biglari Holdings
Considering the 90-day investment horizon Summit Hotel is expected to generate 5.83 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Summit Hotel Properties is 1.28 times less risky than Biglari Holdings. It trades about 0.07 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 17,094 in Biglari Holdings on August 25, 2024 and sell it today you would earn a total of 3,547 from holding Biglari Holdings or generate 20.75% 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. Biglari Holdings
Performance |
| Timeline |
| Summit Hotel Properties |
| Biglari Holdings |
Summit Hotel and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Biglari Holdings
The main advantage of trading using opposite Summit Hotel and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Host Hotels Resorts |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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