Correlation Between Summit Hotel and ECD Automotive

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

Diversification Opportunities for Summit Hotel and ECD Automotive

-0.62

Correlation Coefficient

Summit Hotel  ECD Automotive

Excellent diversification

The 3 months correlation between Summit and ECD is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Summit Hotel i.e., Summit Hotel and ECD Automotive go up and down completely randomly.

Pair Corralation between Summit Hotel and ECD Automotive

Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 0.31 times more return on investment than ECD Automotive. However, Summit Hotel Properties is 3.2 times less risky than ECD Automotive. It trades about 0.13 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.06 per unit of risk. If you would invest  428.00  in Summit Hotel Properties on May 2, 2025 and sell it today you would earn a total of  94.00  from holding Summit Hotel Properties or generate 21.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Summit Hotel Properties  vs.  ECD Automotive Design

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. In spite of very sluggish basic indicators, Summit Hotel displayed solid returns over the last few months and may actually be approaching a breakup point.

ECD Automotive Design

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECD Automotive Design has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Summit Hotel and ECD Automotive

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

The idea behind Summit Hotel Properties and ECD Automotive Design 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.