Correlation Between Sun Life and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Sun Life 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 Sun Life and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Summit Hotel Properties, you can compare the effects of market volatilities on Sun Life 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 Sun Life with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Summit Hotel.
Diversification Opportunities for Sun Life and Summit Hotel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Summit is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial 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 Sun Life 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 Sun Life Financial 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 Sun Life i.e., Sun Life and Summit Hotel go up and down completely randomly.
Pair Corralation between Sun Life and Summit Hotel
Assuming the 90 days horizon Sun Life Financial is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 2.37 times less risky than Summit Hotel. The stock trades about -0.17 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 645.00 in Summit Hotel Properties on October 12, 2024 and sell it today you would lose (10.00) from holding Summit Hotel Properties or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Summit Hotel Properties
Performance |
| Timeline |
| Sun Life Financial |
| Summit Hotel Properties |
Sun Life and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Summit Hotel
The main advantage of trading using opposite Sun Life and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life 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.| Sun Life vs. FUYO GENERAL LEASE | Sun Life vs. JAPAN TOBACCO UNSPADR12 | Sun Life vs. ALBIS LEASING AG | Sun Life vs. ADDUS HOMECARE |
| Summit Hotel vs. United Insurance Holdings | Summit Hotel vs. Sun Life Financial | Summit Hotel vs. United Natural Foods | Summit Hotel vs. Astral Foods Limited |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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