Correlation Between Summit Hotel and Seven West
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on Summit Hotel and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Seven West.
Diversification Opportunities for Summit Hotel and Seven West
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Seven is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Summit Hotel i.e., Summit Hotel and Seven West go up and down completely randomly.
Pair Corralation between Summit Hotel and Seven West
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 0.32 times more return on investment than Seven West. However, Summit Hotel Properties is 3.11 times less risky than Seven West. It trades about 0.19 of its potential returns per unit of risk. Seven West Media is currently generating about 0.01 per unit of risk. If you would invest 570.00 in Summit Hotel Properties on October 19, 2024 and sell it today you would earn a total of 80.00 from holding Summit Hotel Properties or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Seven West Media
Performance |
| Timeline |
| Summit Hotel Properties |
| Seven West Media |
Summit Hotel and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Seven West
The main advantage of trading using opposite Summit Hotel and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| Summit Hotel vs. Treasury Wine Estates | Summit Hotel vs. VIRGIN WINES UK | Summit Hotel vs. American Public Education | Summit Hotel vs. TAL Education Group |
| Seven West vs. Insteel Industries | Seven West vs. Khiron Life Sciences | Seven West vs. COSMOSTEEL HLDGS | Seven West vs. Olympic Steel |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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