Correlation Between Summit Hotel and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Summit Hotel and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and SENECA FOODS-A.
Diversification Opportunities for Summit Hotel and SENECA FOODS-A
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and SENECA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Summit Hotel i.e., Summit Hotel and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Summit Hotel and SENECA FOODS-A
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 0.83 times more return on investment than SENECA FOODS-A. However, Summit Hotel Properties is 1.21 times less risky than SENECA FOODS-A. It trades about 0.19 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.13 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. SENECA FOODS A
Performance |
| Timeline |
| Summit Hotel Properties |
| SENECA FOODS A |
Summit Hotel and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and SENECA FOODS-A
The main advantage of trading using opposite Summit Hotel and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A'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 |
| SENECA FOODS-A vs. Summit Hotel Properties | SENECA FOODS-A vs. ADRIATIC METALS LS 013355 | SENECA FOODS-A vs. De Grey Mining | SENECA FOODS-A vs. INTERCONT HOTELS |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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