Correlation Between Summit Hotel and WSP Global
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and WSP Global 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 WSP Global 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 WSP Global, you can compare the effects of market volatilities on Summit Hotel and WSP Global 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 WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and WSP Global.
Diversification Opportunities for Summit Hotel and WSP Global
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and WSP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Summit Hotel i.e., Summit Hotel and WSP Global go up and down completely randomly.
Pair Corralation between Summit Hotel and WSP Global
Assuming the 90 days horizon Summit Hotel Properties is expected to under-perform the WSP Global. In addition to that, Summit Hotel is 1.05 times more volatile than WSP Global. It trades about -0.04 of its total potential returns per unit of risk. WSP Global is currently generating about -0.02 per unit of volatility. If you would invest 16,863 in WSP Global on November 30, 2024 and sell it today you would lose (363.00) from holding WSP Global or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Summit Hotel Properties vs. WSP Global
Performance |
| Timeline |
| Summit Hotel Properties |
| WSP Global |
Summit Hotel and WSP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and WSP Global
The main advantage of trading using opposite Summit Hotel and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.| Summit Hotel vs. Sumitomo Mitsui Construction | Summit Hotel vs. Sims Metal Management | Summit Hotel vs. Titan Machinery | Summit Hotel vs. Sterling Construction |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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