Correlation Between FIRST SHIP and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and Summit Hotel Properties, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Summit Hotel.
Diversification Opportunities for FIRST SHIP and Summit Hotel
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FIRST and Summit is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE 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 FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Summit Hotel go up and down completely randomly.
Pair Corralation between FIRST SHIP and Summit Hotel
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 2.36 times more return on investment than Summit Hotel. However, FIRST SHIP is 2.36 times more volatile than Summit Hotel Properties. It trades about 0.32 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.04 per unit of risk. If you would invest 1.96 in FIRST SHIP LEASE on October 17, 2024 and sell it today you would earn a total of 0.39 from holding FIRST SHIP LEASE or generate 19.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. Summit Hotel Properties
Performance |
| Timeline |
| FIRST SHIP LEASE |
| Summit Hotel Properties |
FIRST SHIP and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and Summit Hotel
The main advantage of trading using opposite FIRST SHIP and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. Xiwang Special Steel | FIRST SHIP vs. Khiron Life Sciences | FIRST SHIP vs. ANGANG STEEL H | FIRST SHIP vs. Siamgas And Petrochemicals |
| Summit Hotel vs. MidCap Financial Investment | Summit Hotel vs. FUYO GENERAL LEASE | Summit Hotel vs. FIRST SHIP LEASE | Summit Hotel vs. United Rentals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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