Correlation Between Summit Hotel and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and DELTA AIR 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 DELTA AIR 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 DELTA AIR LINES, you can compare the effects of market volatilities on Summit Hotel and DELTA AIR 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 DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and DELTA AIR.
Diversification Opportunities for Summit Hotel and DELTA AIR
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and DELTA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and DELTA AIR LINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELTA AIR LINES 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 DELTA AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELTA AIR LINES has no effect on the direction of Summit Hotel i.e., Summit Hotel and DELTA AIR go up and down completely randomly.
Pair Corralation between Summit Hotel and DELTA AIR
Assuming the 90 days horizon Summit Hotel is expected to generate 2.6 times less return on investment than DELTA AIR. But when comparing it to its historical volatility, Summit Hotel Properties is 1.01 times less risky than DELTA AIR. It trades about 0.03 of its potential returns per unit of risk. DELTA AIR LINES is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,288 in DELTA AIR LINES on September 19, 2024 and sell it today you would earn a total of 2,486 from holding DELTA AIR LINES or generate 75.61% 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. DELTA AIR LINES
Performance |
| Timeline |
| Summit Hotel Properties |
| DELTA AIR LINES |
Summit Hotel and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and DELTA AIR
The main advantage of trading using opposite Summit Hotel and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, DELTA AIR 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 DELTA AIR will offset losses from the drop in DELTA AIR'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 |
| DELTA AIR vs. Monster Beverage Corp | DELTA AIR vs. JLF INVESTMENT | DELTA AIR vs. Postal Savings Bank | DELTA AIR vs. National Beverage Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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