Correlation Between Summit Hotel and 62954HAV0

Can any of the company-specific risk be diversified away by investing in both Summit Hotel and 62954HAV0 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 62954HAV0 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 NXPI 43 18 JUN 29, you can compare the effects of market volatilities on Summit Hotel and 62954HAV0 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 62954HAV0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and 62954HAV0.

Diversification Opportunities for Summit Hotel and 62954HAV0

0.28

Correlation Coefficient

Summit Hotel  62954HAV0

Modest diversification

The 3 months correlation between Summit and 62954HAV0 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and NXPI 43 18 JUN 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXPI 43 18 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 62954HAV0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXPI 43 18 has no effect on the direction of Summit Hotel i.e., Summit Hotel and 62954HAV0 go up and down completely randomly.

Pair Corralation between Summit Hotel and 62954HAV0

Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the 62954HAV0. In addition to that, Summit Hotel is 3.86 times more volatile than NXPI 43 18 JUN 29. It trades about -0.17 of its total potential returns per unit of risk. NXPI 43 18 JUN 29 is currently generating about 0.01 per unit of volatility. If you would invest  9,686  in NXPI 43 18 JUN 29 on December 24, 2024 and sell it today you would earn a total of  18.00  from holding NXPI 43 18 JUN 29 or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Summit Hotel Properties  vs.  NXPI 43 18 JUN 29

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.

NXPI 43 18

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXPI 43 18 JUN 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62954HAV0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Hotel and 62954HAV0

The main advantage of trading using opposite Summit Hotel and 62954HAV0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, 62954HAV0 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 62954HAV0 will offset losses from the drop in 62954HAV0's long position.

The idea behind Summit Hotel Properties and NXPI 43 18 JUN 29 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.