Correlation Between Summit Hotel and KAUFMAN ET

Can any of the company-specific risk be diversified away by investing in both Summit Hotel and KAUFMAN ET 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 KAUFMAN ET 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 KAUFMAN ET BROAD, you can compare the effects of market volatilities on Summit Hotel and KAUFMAN ET 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 KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and KAUFMAN ET.

Diversification Opportunities for Summit Hotel and KAUFMAN ET

0.35

Correlation Coefficient

Summit Hotel  KAUFMAN ET

Weak diversification

The 3 months correlation between Summit and KAUFMAN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD 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 KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of Summit Hotel i.e., Summit Hotel and KAUFMAN ET go up and down completely randomly.

Pair Corralation between Summit Hotel and KAUFMAN ET

Assuming the 90 days horizon Summit Hotel Properties is expected to generate 2.09 times more return on investment than KAUFMAN ET. However, Summit Hotel is 2.09 times more volatile than KAUFMAN ET BROAD. It trades about 0.13 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about 0.15 per unit of risk. If you would invest  352.00  in Summit Hotel Properties on April 7, 2025 and sell it today you would earn a total of  104.00  from holding Summit Hotel Properties or generate 29.55% return on investment over 90 days.

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

Summit Hotel Properties  vs.  KAUFMAN ET BROAD

Summit Hotel Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 10 (%) 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.

KAUFMAN ET BROAD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, KAUFMAN ET exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Hotel and KAUFMAN ET

The main advantage of trading using opposite Summit Hotel and KAUFMAN ET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, KAUFMAN ET 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 KAUFMAN ET will offset losses from the drop in KAUFMAN ET's long position.

The idea behind Summit Hotel Properties and KAUFMAN ET BROAD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.