Correlation Between Summit Hotel and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and PennantPark Investment 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 Summit Hotel and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and PennantPark Investment, you can compare the effects of market volatilities on Summit Hotel and PennantPark Investment 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 Summit Hotel with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and PennantPark Investment.
Diversification Opportunities for Summit Hotel and PennantPark Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and PennantPark is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Summit Hotel i.e., Summit Hotel and PennantPark Investment go up and down completely randomly.
Pair Corralation between Summit Hotel and PennantPark Investment
Assuming the 90 days horizon Summit Hotel is expected to generate 1.28 times less return on investment than PennantPark Investment. In addition to that, Summit Hotel is 1.18 times more volatile than PennantPark Investment. It trades about 0.03 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.04 per unit of volatility. If you would invest 576.00 in PennantPark Investment on September 3, 2024 and sell it today you would earn a total of 56.00 from holding PennantPark Investment or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. PennantPark Investment
Performance |
| Timeline |
| Summit Hotel Properties |
| PennantPark Investment |
Summit Hotel and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and PennantPark Investment
The main advantage of trading using opposite Summit Hotel and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Summit Hotel vs. PSI Software AG | Summit Hotel vs. Cogent Communications Holdings | Summit Hotel vs. CyberArk Software | Summit Hotel vs. INTERSHOP Communications Aktiengesellschaft |
| PennantPark Investment vs. Blackstone Group | PennantPark Investment vs. BlackRock | PennantPark Investment vs. The Bank of | PennantPark Investment vs. Ameriprise Financial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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