Correlation Between Summit Hotel and Cleanaway Waste
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Cleanaway Waste 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 Cleanaway Waste 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 Cleanaway Waste Management, you can compare the effects of market volatilities on Summit Hotel and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Cleanaway Waste.
Diversification Opportunities for Summit Hotel and Cleanaway Waste
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Cleanaway is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Summit Hotel i.e., Summit Hotel and Cleanaway Waste go up and down completely randomly.
Pair Corralation between Summit Hotel and Cleanaway Waste
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 1.37 times more return on investment than Cleanaway Waste. However, Summit Hotel is 1.37 times more volatile than Cleanaway Waste Management. It trades about 0.21 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.12 per unit of risk. If you would invest 543.00 in Summit Hotel Properties on September 1, 2024 and sell it today you would earn a total of 67.00 from holding Summit Hotel Properties or generate 12.34% 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. Cleanaway Waste Management
Performance |
| Timeline |
| Summit Hotel Properties |
| Cleanaway Waste Mana |
Summit Hotel and Cleanaway Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Cleanaway Waste
The main advantage of trading using opposite Summit Hotel and Cleanaway Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Cleanaway Waste 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 Cleanaway Waste will offset losses from the drop in Cleanaway Waste'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 |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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