Correlation Between United Natural and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Summit Hotel Properties, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Summit Hotel.
Diversification Opportunities for United Natural and Summit Hotel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Summit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Natural 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 United Natural 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 United Natural 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 United Natural i.e., United Natural and Summit Hotel go up and down completely randomly.
Pair Corralation between United Natural and Summit Hotel
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Summit Hotel. In addition to that, United Natural is 1.83 times more volatile than Summit Hotel Properties. It trades about -0.08 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.06 per unit of volatility. If you would invest 645.00 in Summit Hotel Properties on October 12, 2024 and sell it today you would lose (10.00) from holding Summit Hotel Properties or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Summit Hotel Properties
Performance |
| Timeline |
| United Natural Foods |
| Summit Hotel Properties |
United Natural and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Summit Hotel
The main advantage of trading using opposite United Natural and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. US Foods Holding | United Natural vs. Axfood AB | United Natural vs. Superior Plus Corp | United Natural vs. NMI Holdings |
| Summit Hotel vs. United Insurance Holdings | Summit Hotel vs. Sun Life Financial | Summit Hotel vs. United Natural Foods | Summit Hotel vs. Astral Foods Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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