Correlation Between BBB Foods and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Summit Hotel Properties, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Summit Hotel.
Diversification Opportunities for BBB Foods and Summit Hotel
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BBB and Summit is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods 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 BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and Summit Hotel go up and down completely randomly.
Pair Corralation between BBB Foods and Summit Hotel
Given the investment horizon of 90 days BBB Foods is expected to generate 1.72 times more return on investment than Summit Hotel. However, BBB Foods is 1.72 times more volatile than Summit Hotel Properties. It trades about 0.12 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.03 per unit of risk. If you would invest 2,966 in BBB Foods on November 2, 2024 and sell it today you would earn a total of 143.00 from holding BBB Foods or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
BBB Foods vs. Summit Hotel Properties
Performance |
| Timeline |
| BBB Foods |
| Summit Hotel Properties |
BBB Foods and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Summit Hotel
The main advantage of trading using opposite BBB Foods and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. Old Dominion Freight | BBB Foods vs. Delek Logistics Partners | BBB Foods vs. Weyco Group | BBB Foods vs. Radcom |
| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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