Correlation Between Summit Hotel and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and INVITATION HOMES 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 INVITATION HOMES 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 INVITATION HOMES DL, you can compare the effects of market volatilities on Summit Hotel and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and INVITATION HOMES.
Diversification Opportunities for Summit Hotel and INVITATION HOMES
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and INVITATION is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Summit Hotel i.e., Summit Hotel and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Summit Hotel and INVITATION HOMES
Assuming the 90 days horizon Summit Hotel is expected to generate 1.88 times less return on investment than INVITATION HOMES. In addition to that, Summit Hotel is 1.48 times more volatile than INVITATION HOMES DL. It trades about 0.01 of its total potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.02 per unit of volatility. If you would invest 2,680 in INVITATION HOMES DL on October 11, 2024 and sell it today you would earn a total of 300.00 from holding INVITATION HOMES DL or generate 11.19% 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. INVITATION HOMES DL
Performance |
| Timeline |
| Summit Hotel Properties |
| INVITATION HOMES |
Summit Hotel and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and INVITATION HOMES
The main advantage of trading using opposite Summit Hotel and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Summit Hotel vs. United Insurance Holdings | Summit Hotel vs. Sun Life Financial | Summit Hotel vs. United Natural Foods | Summit Hotel vs. Astral Foods Limited |
| INVITATION HOMES vs. CHEMICAL INDUSTRIES | INVITATION HOMES vs. KINGBOARD CHEMICAL | INVITATION HOMES vs. FIH MOBILE | INVITATION HOMES vs. Sekisui Chemical Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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