Correlation Between Braemar Hotels and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Braemar Hotels 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 Braemar Hotels and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braemar Hotels Resorts and Sunstone Hotel Investors, you can compare the effects of market volatilities on Braemar Hotels 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 Braemar Hotels with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Sunstone Hotel.
Diversification Opportunities for Braemar Hotels and Sunstone Hotel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Braemar and Sunstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts 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 Braemar Hotels 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 Braemar Hotels Resorts 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 Braemar Hotels i.e., Braemar Hotels and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Braemar Hotels and Sunstone Hotel
Assuming the 90 days trading horizon Braemar Hotels Resorts is expected to under-perform the Sunstone Hotel. In addition to that, Braemar Hotels is 1.68 times more volatile than Sunstone Hotel Investors. It trades about -0.05 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.03 per unit of volatility. If you would invest 2,139 in Sunstone Hotel Investors on August 28, 2024 and sell it today you would lose (19.00) from holding Sunstone Hotel Investors or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braemar Hotels Resorts vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Braemar Hotels Resorts |
| Sunstone Hotel Investors |
Braemar Hotels and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braemar Hotels and Sunstone Hotel
The main advantage of trading using opposite Braemar Hotels and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braemar Hotels 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.| Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust |
| Sunstone Hotel vs. Pebblebrook Hotel Trust | Sunstone Hotel vs. DiamondRock Hospitality | Sunstone Hotel vs. Pebblebrook Hotel Trust |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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