Correlation Between Summit Hotel and Nextnav Acquisition
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Nextnav Acquisition 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 Nextnav Acquisition 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 Nextnav Acquisition Corp, you can compare the effects of market volatilities on Summit Hotel and Nextnav Acquisition 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 Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Nextnav Acquisition.
Diversification Opportunities for Summit Hotel and Nextnav Acquisition
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Nextnav is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp 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 Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Summit Hotel i.e., Summit Hotel and Nextnav Acquisition go up and down completely randomly.
Pair Corralation between Summit Hotel and Nextnav Acquisition
Considering the 90-day investment horizon Summit Hotel is expected to generate 26.08 times less return on investment than Nextnav Acquisition. But when comparing it to its historical volatility, Summit Hotel Properties is 2.32 times less risky than Nextnav Acquisition. It trades about 0.01 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Nextnav Acquisition Corp on September 5, 2024 and sell it today you would earn a total of 1,348 from holding Nextnav Acquisition Corp or generate 471.33% 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. Nextnav Acquisition Corp
Performance |
| Timeline |
| Summit Hotel Properties |
| Nextnav Acquisition Corp |
Summit Hotel and Nextnav Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Nextnav Acquisition
The main advantage of trading using opposite Summit Hotel and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Nextnav Acquisition 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 Nextnav Acquisition will offset losses from the drop in Nextnav Acquisition's long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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