Correlation Between Summit Hotel and Marine Products
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Marine Products 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 Marine Products 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 Marine Products, you can compare the effects of market volatilities on Summit Hotel and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Marine Products.
Diversification Opportunities for Summit Hotel and Marine Products
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Marine is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Summit Hotel i.e., Summit Hotel and Marine Products go up and down completely randomly.
Pair Corralation between Summit Hotel and Marine Products
Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Marine Products. But the stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 1.79 times less risky than Marine Products. The stock trades about -0.04 of its potential returns per unit of risk. The Marine Products is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Marine Products on November 4, 2024 and sell it today you would earn a total of 24.00 from holding Marine Products or generate 2.62% 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. Marine Products
Performance |
| Timeline |
| Summit Hotel Properties |
| Marine Products |
Summit Hotel and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Marine Products
The main advantage of trading using opposite Summit Hotel and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' 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 |
| Marine Products vs. Thor Industries | Marine Products vs. BRP Inc | Marine Products vs. Brunswick | Marine Products vs. EZGO Technologies |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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