Correlation Between Summit Hotel and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Nippon Steel 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 Nippon Steel 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 Nippon Steel, you can compare the effects of market volatilities on Summit Hotel and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Nippon Steel.
Diversification Opportunities for Summit Hotel and Nippon Steel
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Nippon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Summit Hotel i.e., Summit Hotel and Nippon Steel go up and down completely randomly.
Pair Corralation between Summit Hotel and Nippon Steel
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 1.25 times more return on investment than Nippon Steel. However, Summit Hotel is 1.25 times more volatile than Nippon Steel. It trades about 0.03 of its potential returns per unit of risk. Nippon Steel is currently generating about -0.04 per unit of risk. If you would invest 597.00 in Summit Hotel Properties on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Summit Hotel Properties or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Nippon Steel
Performance |
| Timeline |
| Summit Hotel Properties |
| Nippon Steel |
Summit Hotel and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Nippon Steel
The main advantage of trading using opposite Summit Hotel and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel'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 |
| Nippon Steel vs. MAGNUM MINING EXP | Nippon Steel vs. Perseus Mining Limited | Nippon Steel vs. Apollo Medical Holdings | Nippon Steel vs. G III Apparel Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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