Correlation Between Summit Hotel and Jabil Circuit
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Jabil Circuit 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 Jabil Circuit 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 Jabil Circuit, you can compare the effects of market volatilities on Summit Hotel and Jabil Circuit 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 Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Jabil Circuit.
Diversification Opportunities for Summit Hotel and Jabil Circuit
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and Jabil is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit 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 Jabil Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Circuit has no effect on the direction of Summit Hotel i.e., Summit Hotel and Jabil Circuit go up and down completely randomly.
Pair Corralation between Summit Hotel and Jabil Circuit
Considering the 90-day investment horizon Summit Hotel is expected to generate 12.24 times less return on investment than Jabil Circuit. But when comparing it to its historical volatility, Summit Hotel Properties is 1.13 times less risky than Jabil Circuit. It trades about 0.02 of its potential returns per unit of risk. Jabil Circuit is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,336 in Jabil Circuit on September 25, 2024 and sell it today you would earn a total of 3,164 from holding Jabil Circuit or generate 27.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Hotel Properties vs. Jabil Circuit
Performance |
Timeline |
Summit Hotel Properties |
Jabil Circuit |
Summit Hotel and Jabil Circuit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Hotel and Jabil Circuit
The main advantage of trading using opposite Summit Hotel and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Jabil Circuit 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 Jabil Circuit will offset losses from the drop in Jabil Circuit'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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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