Correlation Between RETAIL FOOD and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and Summit Hotel 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 RETAIL FOOD and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Summit Hotel Properties, you can compare the effects of market volatilities on RETAIL FOOD and Summit Hotel 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 RETAIL FOOD with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Summit Hotel.
Diversification Opportunities for RETAIL FOOD and Summit Hotel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RETAIL and Summit is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and Summit Hotel go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Summit Hotel
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, RETAIL FOOD GROUP is 1.06 times less risky than Summit Hotel. The stock trades about -0.02 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 526.00 in Summit Hotel Properties on September 15, 2024 and sell it today you would earn a total of 109.00 from holding Summit Hotel Properties or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Summit Hotel Properties
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Summit Hotel Properties |
RETAIL FOOD and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Summit Hotel
The main advantage of trading using opposite RETAIL FOOD and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Xenia Hotels Resorts | Summit Hotel vs. ASHFORD HOSPITTRUST |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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