Correlation Between DiamondRock Hospitality and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both DiamondRock 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 DiamondRock 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 DiamondRock Hospitality and Sunstone Hotel Investors, you can compare the effects of market volatilities on DiamondRock 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 DiamondRock Hospitality with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Sunstone Hotel.
Diversification Opportunities for DiamondRock Hospitality and Sunstone Hotel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DiamondRock and Sunstone is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality 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 DiamondRock 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 DiamondRock Hospitality 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 DiamondRock Hospitality i.e., DiamondRock Hospitality and Sunstone Hotel go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Sunstone Hotel
Assuming the 90 days trading horizon DiamondRock Hospitality is expected to generate 0.28 times more return on investment than Sunstone Hotel. However, DiamondRock Hospitality is 3.56 times less risky than Sunstone Hotel. It trades about 0.06 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.15 per unit of risk. If you would invest 2,595 in DiamondRock Hospitality on August 31, 2024 and sell it today you would earn a total of 11.00 from holding DiamondRock Hospitality or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Sunstone Hotel Investors
Performance |
| Timeline |
| DiamondRock Hospitality |
| Sunstone Hotel Investors |
DiamondRock Hospitality and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Sunstone Hotel
The main advantage of trading using opposite DiamondRock Hospitality and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock 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.| DiamondRock Hospitality vs. Braemar Hotels Resorts | DiamondRock Hospitality vs. Summit Hotel Properties |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |