Correlation Between Summit Hotel and HONEYWELL

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

Diversification Opportunities for Summit Hotel and HONEYWELL

-0.6

Correlation Coefficient

Summit Hotel  HONEYWELL

Excellent diversification

The 3 months correlation between Summit and HONEYWELL is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and HONEYWELL INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTL 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 HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTL INC has no effect on the direction of Summit Hotel i.e., Summit Hotel and HONEYWELL go up and down completely randomly.

Pair Corralation between Summit Hotel and HONEYWELL

Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 1.43 times more return on investment than HONEYWELL. However, Summit Hotel is 1.43 times more volatile than HONEYWELL INTL INC. It trades about 0.08 of its potential returns per unit of risk. HONEYWELL INTL INC is currently generating about 0.06 per unit of risk. If you would invest  620.00  in Summit Hotel Properties on October 26, 2024 and sell it today you would earn a total of  53.00  from holding Summit Hotel Properties or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	64.41%
Values	Daily Returns

Summit Hotel Properties  vs.  HONEYWELL INTL INC

Summit Hotel Properties

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HONEYWELL INTL INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTL INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HONEYWELL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Hotel and HONEYWELL

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

The idea behind Summit Hotel Properties and HONEYWELL INTL 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.