Correlation Between Summit Hotel and Cibl

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

Diversification Opportunities for Summit Hotel and Cibl

-0.13

Correlation Coefficient

Summit Hotel  Cibl

Good diversification

The 3 months correlation between Summit and Cibl is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc 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 Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of Summit Hotel i.e., Summit Hotel and Cibl go up and down completely randomly.

Pair Corralation between Summit Hotel and Cibl

Assuming the 90 days trading horizon Summit Hotel Properties is expected to under-perform the Cibl. In addition to that, Summit Hotel is 1.43 times more volatile than Cibl Inc. It trades about -0.01 of its total potential returns per unit of risk. Cibl Inc is currently generating about 0.02 per unit of volatility. If you would invest  181,075  in Cibl Inc on January 21, 2024 and sell it today you would earn a total of  925.00  from holding Cibl Inc or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Summit Hotel Properties  vs.  Cibl Inc

Summit Hotel Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Hotel Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Summit Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Hotel and Cibl

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

The idea behind Summit Hotel Properties and Cibl Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.