Correlation Between Summit Hotel and Celestica
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Celestica 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 Celestica 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 Celestica, you can compare the effects of market volatilities on Summit Hotel and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Celestica.
Diversification Opportunities for Summit Hotel and Celestica
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Celestica is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Summit Hotel i.e., Summit Hotel and Celestica go up and down completely randomly.
Pair Corralation between Summit Hotel and Celestica
Considering the 90-day investment horizon Summit Hotel is expected to generate 31.57 times less return on investment than Celestica. But when comparing it to its historical volatility, Summit Hotel Properties is 1.83 times less risky than Celestica. It trades about 0.02 of its potential returns per unit of risk. Celestica is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,072 in Celestica on September 25, 2024 and sell it today you would earn a total of 4,473 from holding Celestica or generate 88.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Hotel Properties vs. Celestica
Performance |
Timeline |
Summit Hotel Properties |
Celestica |
Summit Hotel and Celestica Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Hotel and Celestica
The main advantage of trading using opposite Summit Hotel and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Chatham Lodging Trust |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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