Correlation Between Summit Hotel and USU Software
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and USU Software 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 USU Software 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 USU Software AG, you can compare the effects of market volatilities on Summit Hotel and USU Software 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 USU Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and USU Software.
Diversification Opportunities for Summit Hotel and USU Software
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and USU is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of Summit Hotel i.e., Summit Hotel and USU Software go up and down completely randomly.
Pair Corralation between Summit Hotel and USU Software
Assuming the 90 days horizon Summit Hotel is expected to generate 1.48 times less return on investment than USU Software. But when comparing it to its historical volatility, Summit Hotel Properties is 1.03 times less risky than USU Software. It trades about 0.02 of its potential returns per unit of risk. USU Software AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,935 in USU Software AG on September 12, 2024 and sell it today you would earn a total of 295.00 from holding USU Software AG or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. USU Software AG
Performance |
| Timeline |
| Summit Hotel Properties |
| USU Software AG |
Summit Hotel and USU Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and USU Software
The main advantage of trading using opposite Summit Hotel and USU Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, USU Software 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 USU Software will offset losses from the drop in USU Software's long position.| Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Xenia Hotels Resorts | Summit Hotel vs. ASHFORD HOSPITTRUST |
| USU Software vs. SENECA FOODS A | USU Software vs. Lifeway Foods | USU Software vs. PT Indofood Sukses | USU Software vs. Verizon Communications |
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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