Correlation Between Summit Hotel and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and PennantPark Floating 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 PennantPark Floating 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 PennantPark Floating Rate, you can compare the effects of market volatilities on Summit Hotel and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and PennantPark Floating.
Diversification Opportunities for Summit Hotel and PennantPark Floating
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and PennantPark is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Summit Hotel i.e., Summit Hotel and PennantPark Floating go up and down completely randomly.
Pair Corralation between Summit Hotel and PennantPark Floating
Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 3.28 times more return on investment than PennantPark Floating. However, Summit Hotel is 3.28 times more volatile than PennantPark Floating Rate. It trades about 0.19 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.02 per unit of risk. If you would invest 604.00 in Summit Hotel Properties on September 1, 2024 and sell it today you would earn a total of 54.00 from holding Summit Hotel Properties or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. PennantPark Floating Rate
Performance |
| Timeline |
| Summit Hotel Properties |
| PennantPark Floating Rate |
Summit Hotel and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and PennantPark Floating
The main advantage of trading using opposite Summit Hotel and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. RLJ Lodging 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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