Correlation Between Summit Hotel and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Summit Hotel and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Tower Semiconductor.
Diversification Opportunities for Summit Hotel and Tower Semiconductor
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Tower is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Summit Hotel i.e., Summit Hotel and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Summit Hotel and Tower Semiconductor
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 0.51 times more return on investment than Tower Semiconductor. However, Summit Hotel Properties is 1.94 times less risky than Tower Semiconductor. It trades about -0.02 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.15 per unit of risk. If you would invest 650.00 in Summit Hotel Properties on November 4, 2024 and sell it today you would lose (5.00) from holding Summit Hotel Properties or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Summit Hotel Properties vs. Tower Semiconductor
Performance |
| Timeline |
| Summit Hotel Properties |
| Tower Semiconductor |
Summit Hotel and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Tower Semiconductor
The main advantage of trading using opposite Summit Hotel and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Summit Hotel vs. Motorcar Parts of | Summit Hotel vs. Warner Music Group | Summit Hotel vs. Grupo Carso SAB | Summit Hotel vs. Cogent Communications Holdings |
| Tower Semiconductor vs. MCEWEN MINING INC | Tower Semiconductor vs. Calibre Mining Corp | Tower Semiconductor vs. GRIFFIN MINING LTD | Tower Semiconductor vs. MAGNUM MINING EXP |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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