Correlation Between Summit Hotel and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Omega Healthcare 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 Omega Healthcare 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 Omega Healthcare Investors, you can compare the effects of market volatilities on Summit Hotel and Omega Healthcare 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 Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Omega Healthcare.
Diversification Opportunities for Summit Hotel and Omega Healthcare
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Omega is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Summit Hotel i.e., Summit Hotel and Omega Healthcare go up and down completely randomly.
Pair Corralation between Summit Hotel and Omega Healthcare
Considering the 90-day investment horizon Summit Hotel is expected to generate 2.48 times less return on investment than Omega Healthcare. In addition to that, Summit Hotel is 1.46 times more volatile than Omega Healthcare Investors. It trades about 0.03 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.1 per unit of volatility. If you would invest 2,791 in Omega Healthcare Investors on November 9, 2024 and sell it today you would earn a total of 1,015 from holding Omega Healthcare Investors or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Omega Healthcare Investors
Performance |
| Timeline |
| Summit Hotel Properties |
| Omega Healthcare Inv |
Summit Hotel and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Omega Healthcare
The main advantage of trading using opposite Summit Hotel and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare'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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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