Correlation Between Summit Hotel and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER, you can compare the effects of market volatilities on Summit Hotel and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and ALERION CLEANPOWER.
Diversification Opportunities for Summit Hotel and ALERION CLEANPOWER
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and ALERION is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of Summit Hotel i.e., Summit Hotel and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between Summit Hotel and ALERION CLEANPOWER
Assuming the 90 days horizon Summit Hotel is expected to generate 1.47 times less return on investment than ALERION CLEANPOWER. But when comparing it to its historical volatility, Summit Hotel Properties is 1.28 times less risky than ALERION CLEANPOWER. It trades about 0.21 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,502 in ALERION CLEANPOWER on September 1, 2024 and sell it today you would earn a total of 278.00 from holding ALERION CLEANPOWER or generate 18.51% 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. ALERION CLEANPOWER
Performance |
| Timeline |
| Summit Hotel Properties |
| ALERION CLEANPOWER |
Summit Hotel and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and ALERION CLEANPOWER
The main advantage of trading using opposite Summit Hotel and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| Summit Hotel vs. PennantPark Investment | Summit Hotel vs. Strategic Investments AS | Summit Hotel vs. HK Electric Investments | Summit Hotel vs. ELECTRONIC ARTS |
| ALERION CLEANPOWER vs. CN LGYPWRGRUNSPADR10 | ALERION CLEANPOWER vs. Encavis AG | ALERION CLEANPOWER vs. The Bank of | ALERION CLEANPOWER vs. Sixt SE |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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