Correlation Between Lifeway Foods and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods 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 Lifeway Foods and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Summit Hotel Properties, you can compare the effects of market volatilities on Lifeway Foods 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 Lifeway Foods with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Summit Hotel.
Diversification Opportunities for Lifeway Foods and Summit Hotel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lifeway and Summit is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods i.e., Lifeway Foods and Summit Hotel go up and down completely randomly.
Pair Corralation between Lifeway Foods and Summit Hotel
Assuming the 90 days horizon Lifeway Foods is expected to generate 2.45 times more return on investment than Summit Hotel. However, Lifeway Foods is 2.45 times more volatile than Summit Hotel Properties. It trades about 0.08 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.0 per unit of risk. If you would invest 575.00 in Lifeway Foods on November 27, 2024 and sell it today you would earn a total of 1,525 from holding Lifeway Foods or generate 265.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Summit Hotel Properties
Performance |
| Timeline |
| Lifeway Foods |
| Summit Hotel Properties |
Lifeway Foods and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Summit Hotel
The main advantage of trading using opposite Lifeway Foods and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods 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.| Lifeway Foods vs. FAST RETAIL ADR | Lifeway Foods vs. Retail Estates NV | Lifeway Foods vs. Plastic Omnium | Lifeway Foods vs. Vulcan Materials |
| Summit Hotel vs. Hua Hong Semiconductor | Summit Hotel vs. Elmos Semiconductor SE | Summit Hotel vs. SmarTone Telecommunications Holdings | Summit Hotel vs. Semiconductor Manufacturing International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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