Correlation Between Caseys General and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Sunstone Hotel Investors, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Sunstone Hotel.
Diversification Opportunities for Caseys General and Sunstone Hotel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caseys and Sunstone is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores 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 Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Caseys General and Sunstone Hotel
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.97 times more return on investment than Sunstone Hotel. However, Caseys General Stores is 1.04 times less risky than Sunstone Hotel. It trades about 0.08 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.05 per unit of risk. If you would invest 21,711 in Caseys General Stores on September 14, 2024 and sell it today you would earn a total of 18,689 from holding Caseys General Stores or generate 86.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Caseys General Stores |
| Sunstone Hotel Investors |
Caseys General and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Sunstone Hotel
The main advantage of trading using opposite Caseys General and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Xenia Hotels Resorts | Sunstone Hotel vs. Summit Hotel Properties | Sunstone Hotel vs. ASHFORD HOSPITTRUST |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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