Correlation Between Summit Hotel and Nextnav Acquisition

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

Diversification Opportunities for Summit Hotel and Nextnav Acquisition

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Summit and Nextnav is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp 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 Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Summit Hotel i.e., Summit Hotel and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between Summit Hotel and Nextnav Acquisition

Considering the 90-day investment horizon Summit Hotel is expected to generate 9.26 times less return on investment than Nextnav Acquisition. But when comparing it to its historical volatility, Summit Hotel Properties is 2.24 times less risky than Nextnav Acquisition. It trades about 0.03 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  741.00  in Nextnav Acquisition Corp on September 9, 2024 and sell it today you would earn a total of  960.00  from holding Nextnav Acquisition Corp or generate 129.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Summit Hotel Properties  vs.  Nextnav Acquisition Corp

 Performance 
       Timeline  
Summit Hotel Properties 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Nextnav Acquisition Corp 

Risk-Adjusted Performance

31 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel and Nextnav Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Hotel and Nextnav Acquisition

The main advantage of trading using opposite Summit Hotel and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Nextnav Acquisition 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 Nextnav Acquisition will offset losses from the drop in Nextnav Acquisition's long position.
The idea behind Summit Hotel Properties and Nextnav Acquisition Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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