Correlation Between Blue Sky and Summit Hotel

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

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

Diversification Opportunities for Blue Sky and Summit Hotel

0.44

Correlation Coefficient

Blue Sky  Summit Hotel

Very weak diversification

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

Pair Corralation between Blue Sky and Summit Hotel

Assuming the 90 days trading horizon Blue Sky Uranium is expected to generate 4.06 times more return on investment than Summit Hotel. However, Blue Sky is 4.06 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 0.18 per unit of risk. If you would invest  2.56  in Blue Sky Uranium on April 24, 2025 and sell it today you would earn a total of  1.64  from holding Blue Sky Uranium or generate 64.06% return on investment over 90 days.

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

Blue Sky Uranium  vs.  Summit Hotel Properties

Blue Sky Uranium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sky Uranium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Blue Sky reported solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Summit Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sky and Summit Hotel

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.