Correlation Between Inflection Point and Summit Hotel

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

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

Diversification Opportunities for Inflection Point and Summit Hotel

0.44

Correlation Coefficient

Inflection Point  Summit Hotel

Very weak diversification

The 3 months correlation between Inflection and Summit is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition 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 Inflection Point 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 Inflection Point Acquisition 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 Inflection Point i.e., Inflection Point and Summit Hotel go up and down completely randomly.

Pair Corralation between Inflection Point and Summit Hotel

Assuming the 90 days horizon Inflection Point Acquisition is expected to generate 1.68 times more return on investment than Summit Hotel. However, Inflection Point is 1.68 times more volatile than Summit Hotel Properties. It trades about 0.08 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.01 per unit of risk. If you would invest  1,080  in Inflection Point Acquisition on September 28, 2024 and sell it today you would earn a total of  175.00  from holding Inflection Point Acquisition or generate 16.2% return on investment over 90 days.

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

Inflection Point Acquisition  vs.  Summit Hotel Properties

Inflection Point Acq

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel Properties

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Summit Hotel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Inflection Point and Summit Hotel

The main advantage of trading using opposite Inflection Point and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflection Point 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 Inflection Point Acquisition 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.