Correlation Between Summit Hotel and RadNet

Can any of the company-specific risk be diversified away by investing in both Summit Hotel and RadNet 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 RadNet 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 RadNet Inc, you can compare the effects of market volatilities on Summit Hotel and RadNet 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 RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and RadNet.

Diversification Opportunities for Summit Hotel and RadNet

0.77

Correlation Coefficient

Summit Hotel  RadNet

Poor diversification

The 3 months correlation between Summit and RadNet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Summit Hotel i.e., Summit Hotel and RadNet go up and down completely randomly.

Pair Corralation between Summit Hotel and RadNet

Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 0.66 times more return on investment than RadNet. However, Summit Hotel Properties is 1.51 times less risky than RadNet. It trades about -0.17 of its potential returns per unit of risk. RadNet Inc is currently generating about -0.18 per unit of risk. If you would invest  670.00  in Summit Hotel Properties on December 27, 2024 and sell it today you would lose (126.00) from holding Summit Hotel Properties or give up 18.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Summit Hotel Properties  vs.  RadNet Inc

Summit Hotel Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Summit Hotel Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

RadNet Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days RadNet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Summit Hotel and RadNet

The main advantage of trading using opposite Summit Hotel and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet's long position.

The idea behind Summit Hotel Properties and RadNet Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.