Correlation Between Summit Hotel and Constellation Software
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Constellation 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 Constellation 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 Constellation Software, you can compare the effects of market volatilities on Summit Hotel and Constellation 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 Constellation Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Constellation Software.
Diversification Opportunities for Summit Hotel and Constellation Software
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Constellation is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Summit Hotel i.e., Summit Hotel and Constellation Software go up and down completely randomly.
Pair Corralation between Summit Hotel and Constellation Software
Assuming the 90 days horizon Summit Hotel is expected to generate 4.88 times less return on investment than Constellation Software. In addition to that, Summit Hotel is 1.64 times more volatile than Constellation Software. It trades about 0.02 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.13 per unit of volatility. If you would invest 143,435 in Constellation Software on September 12, 2024 and sell it today you would earn a total of 172,565 from holding Constellation Software or generate 120.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Constellation Software
Performance |
| Timeline |
| Summit Hotel Properties |
| Constellation Software |
Summit Hotel and Constellation Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Constellation Software
The main advantage of trading using opposite Summit Hotel and Constellation Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Constellation 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 Constellation Software will offset losses from the drop in Constellation 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 |
| Constellation Software vs. Apple Inc | Constellation Software vs. Apple Inc | Constellation Software vs. Apple Inc | Constellation Software vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance |