Correlation Between Summit Hotel and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Nomad Foods 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 Nomad Foods 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 Nomad Foods, you can compare the effects of market volatilities on Summit Hotel and Nomad Foods 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 Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Nomad Foods.
Diversification Opportunities for Summit Hotel and Nomad Foods
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Nomad is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods 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 Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Summit Hotel i.e., Summit Hotel and Nomad Foods go up and down completely randomly.
Pair Corralation between Summit Hotel and Nomad Foods
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 1.4 times more return on investment than Nomad Foods. However, Summit Hotel is 1.4 times more volatile than Nomad Foods. It trades about 0.06 of its potential returns per unit of risk. Nomad Foods is currently generating about -0.06 per unit of risk. If you would invest 607.00 in Summit Hotel Properties on September 26, 2024 and sell it today you would earn a total of 43.00 from holding Summit Hotel Properties or generate 7.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Hotel Properties vs. Nomad Foods
Performance |
Timeline |
Summit Hotel Properties |
Nomad Foods |
Summit Hotel and Nomad Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Hotel and Nomad Foods
The main advantage of trading using opposite Summit Hotel and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.Summit Hotel vs. Host Hotels Resorts | Summit Hotel vs. Ryman Hospitality Properties | Summit Hotel vs. Park Hotels Resorts | Summit Hotel vs. Pebblebrook Hotel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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