Correlation Between SEI Investments and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both SEI Investments and Summit Hotel 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 SEI Investments and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Summit Hotel Properties, you can compare the effects of market volatilities on SEI Investments and Summit Hotel 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 SEI Investments with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Summit Hotel.
Diversification Opportunities for SEI Investments and Summit Hotel
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEI and Summit is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and SEI Investments 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 SEI Investments are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of SEI Investments i.e., SEI Investments and Summit Hotel go up and down completely randomly.
Pair Corralation between SEI Investments and Summit Hotel
Given the investment horizon of 90 days SEI Investments is expected to generate 0.6 times more return on investment than Summit Hotel. However, SEI Investments is 1.66 times less risky than Summit Hotel. It trades about 0.28 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.0 per unit of risk. If you would invest 6,727 in SEI Investments on September 3, 2024 and sell it today you would earn a total of 1,536 from holding SEI Investments or generate 22.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Investments vs. Summit Hotel Properties
Performance |
| Timeline |
| SEI Investments |
| Summit Hotel Properties |
SEI Investments and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Summit Hotel
The main advantage of trading using opposite SEI Investments and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
| Summit Hotel vs. Sotherly Hotels | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Ryman Hospitality Properties |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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