Correlation Between RadNet and Summit Hotel

Can any of the company-specific risk be diversified away by investing in both RadNet 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 RadNet and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RadNet Inc and Summit Hotel Properties, you can compare the effects of market volatilities on RadNet 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 RadNet with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Summit Hotel.

Diversification Opportunities for RadNet and Summit Hotel

0.02

Correlation Coefficient

RadNet  Summit Hotel

Significant diversification

The 3 months correlation between RadNet and Summit is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc 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 RadNet 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 RadNet Inc 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 RadNet i.e., RadNet and Summit Hotel go up and down completely randomly.

Pair Corralation between RadNet and Summit Hotel

Given the investment horizon of 90 days RadNet Inc is expected to generate 1.51 times more return on investment than Summit Hotel. However, RadNet is 1.51 times more volatile than Summit Hotel Properties. It trades about 0.13 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.07 per unit of risk. If you would invest  6,319  in RadNet Inc on September 5, 2024 and sell it today you would earn a total of  1,745  from holding RadNet Inc or generate 27.62% return on investment over 90 days.

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

RadNet Inc  vs.  Summit Hotel Properties

RadNet Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 5 (%) 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 January 2025.

Pair Trading with RadNet and Summit Hotel

The main advantage of trading using opposite RadNet and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet 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.

The idea behind RadNet Inc and Summit Hotel Properties 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.