Correlation Between Summit Hotel and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials, you can compare the effects of market volatilities on Summit Hotel and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Vulcan Materials.
Diversification Opportunities for Summit Hotel and Vulcan Materials
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Vulcan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Summit Hotel i.e., Summit Hotel and Vulcan Materials go up and down completely randomly.
Pair Corralation between Summit Hotel and Vulcan Materials
Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Vulcan Materials. In addition to that, Summit Hotel is 1.39 times more volatile than Vulcan Materials. It trades about 0.0 of its total potential returns per unit of risk. Vulcan Materials is currently generating about 0.06 per unit of volatility. If you would invest 18,317 in Vulcan Materials on November 2, 2024 and sell it today you would earn a total of 9,206 from holding Vulcan Materials or generate 50.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Summit Hotel Properties vs. Vulcan Materials
Performance |
| Timeline |
| Summit Hotel Properties |
| Vulcan Materials |
Summit Hotel and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Vulcan Materials
The main advantage of trading using opposite Summit Hotel and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' 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 |
| Vulcan Materials vs. Eagle Materials | Vulcan Materials vs. CRH PLC ADR | Vulcan Materials vs. Summit Materials | Vulcan Materials vs. Cemex SAB de |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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