Correlation Between RBC Bearings and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both RBC Bearings 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 RBC Bearings and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RBC Bearings Incorporated and Summit Hotel Properties, you can compare the effects of market volatilities on RBC Bearings 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 RBC Bearings with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Summit Hotel.
Diversification Opportunities for RBC Bearings and Summit Hotel
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RBC and Summit is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated 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 RBC Bearings 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 RBC Bearings Incorporated 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 RBC Bearings i.e., RBC Bearings and Summit Hotel go up and down completely randomly.
Pair Corralation between RBC Bearings and Summit Hotel
Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 1.0 times more return on investment than Summit Hotel. However, RBC Bearings is 1.0 times more volatile than Summit Hotel Properties. It trades about 0.34 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.08 per unit of risk. If you would invest 28,637 in RBC Bearings Incorporated on August 31, 2024 and sell it today you would earn a total of 5,329 from holding RBC Bearings Incorporated or generate 18.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBC Bearings Incorporated vs. Summit Hotel Properties
Performance |
| Timeline |
| RBC Bearings |
| Summit Hotel Properties |
RBC Bearings and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBC Bearings and Summit Hotel
The main advantage of trading using opposite RBC Bearings and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings 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.| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
| Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Chatham Lodging Trust |
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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