Correlation Between Ashford Hospitality and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Sunstone 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 Ashford Hospitality and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashford Hospitality Trust and Sunstone Hotel Investors, you can compare the effects of market volatilities on Ashford Hospitality and Sunstone 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 Ashford Hospitality with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Sunstone Hotel.
Diversification Opportunities for Ashford Hospitality and Sunstone Hotel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and Sunstone is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and Ashford Hospitality 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 Ashford Hospitality Trust are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Sunstone Hotel
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Sunstone Hotel. In addition to that, Ashford Hospitality is 1.53 times more volatile than Sunstone Hotel Investors. It trades about 0.0 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.11 per unit of volatility. If you would invest 1,034 in Sunstone Hotel Investors on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Sunstone Hotel Investors or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Sunstone Hotel Investors |
Ashford Hospitality and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Sunstone Hotel
The main advantage of trading using opposite Ashford Hospitality and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Sunstone 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Summit Hotel Properties |
| Sunstone Hotel vs. RLJ Lodging Trust | Sunstone Hotel vs. Pebblebrook Hotel Trust | Sunstone Hotel vs. Summit Hotel Properties | Sunstone Hotel vs. Ryman Hospitality Properties |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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