Correlation Between Elme Communities and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Elme Communities 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 Elme Communities and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elme Communities and Sunstone Hotel Investors, you can compare the effects of market volatilities on Elme Communities 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 Elme Communities with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elme Communities and Sunstone Hotel.
Diversification Opportunities for Elme Communities and Sunstone Hotel
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elme and Sunstone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elme Communities 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 Elme Communities 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 Elme Communities 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 Elme Communities i.e., Elme Communities and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Elme Communities and Sunstone Hotel
Given the investment horizon of 90 days Elme Communities is expected to generate 1.0 times more return on investment than Sunstone Hotel. However, Elme Communities is 1.0 times less risky than Sunstone Hotel. It trades about -0.05 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 1,508 in Elme Communities on November 2, 2024 and sell it today you would lose (20.00) from holding Elme Communities or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elme Communities vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Elme Communities |
| Sunstone Hotel Investors |
Elme Communities and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elme Communities and Sunstone Hotel
The main advantage of trading using opposite Elme Communities and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elme Communities 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.| Elme Communities vs. BRT Realty Trust | Elme Communities vs. Nexpoint Residential Trust | Elme Communities vs. Centerspace | Elme Communities vs. Veris Residential |
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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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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