Correlation Between Choice Hotels and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Choice 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 Choice 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 Choice Hotels International and Sunstone Hotel Investors, you can compare the effects of market volatilities on Choice 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 Choice Hotels with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Sunstone Hotel.
Diversification Opportunities for Choice Hotels and Sunstone Hotel
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Choice and Sunstone is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International 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 Choice 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 Choice Hotels International 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 Choice Hotels i.e., Choice Hotels and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Choice Hotels and Sunstone Hotel
Assuming the 90 days horizon Choice Hotels International is expected to generate 1.02 times more return on investment than Sunstone Hotel. However, Choice Hotels is 1.02 times more volatile than Sunstone Hotel Investors. It trades about 0.03 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.03 per unit of risk. If you would invest 11,263 in Choice Hotels International on November 6, 2024 and sell it today you would earn a total of 2,737 from holding Choice Hotels International or generate 24.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Choice Hotels Intern |
| Sunstone Hotel Investors |
Choice Hotels and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Sunstone Hotel
The main advantage of trading using opposite Choice Hotels and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice 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.| Choice Hotels vs. Align Technology | Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. Gaztransport Technigaz SA | Choice Hotels vs. Television Broadcasts Limited |
| Sunstone Hotel vs. SBM OFFSHORE | Sunstone Hotel vs. Ares Management Corp | Sunstone Hotel vs. STGEORGE MINING LTD | Sunstone Hotel vs. Cardinal Health |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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