Correlation Between Summit Hotel and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance Group, you can compare the effects of market volatilities on Summit Hotel and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Sabre Insurance.
Diversification Opportunities for Summit Hotel and Sabre Insurance
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Sabre is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Summit Hotel i.e., Summit Hotel and Sabre Insurance go up and down completely randomly.
Pair Corralation between Summit Hotel and Sabre Insurance
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 0.8 times more return on investment than Sabre Insurance. However, Summit Hotel Properties is 1.26 times less risky than Sabre Insurance. It trades about 0.04 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.03 per unit of risk. If you would invest 615.00 in Summit Hotel Properties on October 28, 2024 and sell it today you would earn a total of 15.00 from holding Summit Hotel Properties or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Sabre Insurance Group
Performance |
| Timeline |
| Summit Hotel Properties |
| Sabre Insurance Group |
Summit Hotel and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Sabre Insurance
The main advantage of trading using opposite Summit Hotel and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| Summit Hotel vs. Xiwang Special Steel | Summit Hotel vs. MAANSHAN IRON H | Summit Hotel vs. United States Steel | Summit Hotel vs. CALTAGIRONE EDITORE |
| Sabre Insurance vs. DFS Furniture PLC | Sabre Insurance vs. CarsalesCom | Sabre Insurance vs. GRUPO CARSO A1 | Sabre Insurance vs. CENTURIA OFFICE REIT |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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