Correlation Between Summit Hotel and URBAN OUTFITTERS
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS, you can compare the effects of market volatilities on Summit Hotel and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and URBAN OUTFITTERS.
Diversification Opportunities for Summit Hotel and URBAN OUTFITTERS
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and URBAN is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of Summit Hotel i.e., Summit Hotel and URBAN OUTFITTERS go up and down completely randomly.
Pair Corralation between Summit Hotel and URBAN OUTFITTERS
Assuming the 90 days horizon Summit Hotel is expected to generate 3.3 times less return on investment than URBAN OUTFITTERS. But when comparing it to its historical volatility, Summit Hotel Properties is 1.47 times less risky than URBAN OUTFITTERS. It trades about 0.03 of its potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,740 in URBAN OUTFITTERS on October 29, 2024 and sell it today you would earn a total of 1,460 from holding URBAN OUTFITTERS or generate 39.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Summit Hotel Properties vs. URBAN OUTFITTERS
Performance |
| Timeline |
| Summit Hotel Properties |
| URBAN OUTFITTERS |
Summit Hotel and URBAN OUTFITTERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and URBAN OUTFITTERS
The main advantage of trading using opposite Summit Hotel and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.| Summit Hotel vs. PT Wintermar Offshore | Summit Hotel vs. BW OFFSHORE LTD | Summit Hotel vs. SBI Insurance Group | Summit Hotel vs. Japan Post Insurance |
| URBAN OUTFITTERS vs. Easy Software AG | URBAN OUTFITTERS vs. Nok Airlines PCL | URBAN OUTFITTERS vs. CyberArk Software | URBAN OUTFITTERS vs. UPDATE SOFTWARE |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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