Correlation Between INSURANCE AUST and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Sunstone Hotel Investors, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Sunstone Hotel.
Diversification Opportunities for INSURANCE AUST and Sunstone Hotel
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between INSURANCE and Sunstone is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Sunstone Hotel go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Sunstone Hotel
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 2.07 times more return on investment than Sunstone Hotel. However, INSURANCE AUST is 2.07 times more volatile than Sunstone Hotel Investors. It trades about -0.1 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.24 per unit of risk. If you would invest 517.00 in INSURANCE AUST GRP on November 27, 2024 and sell it today you would lose (41.00) from holding INSURANCE AUST GRP or give up 7.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Sunstone Hotel Investors
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Sunstone Hotel Investors |
INSURANCE AUST and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Sunstone Hotel
The main advantage of trading using opposite INSURANCE AUST and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.| INSURANCE AUST vs. MAGIC SOFTWARE ENTR | INSURANCE AUST vs. PULSION Medical Systems | INSURANCE AUST vs. GERATHERM MEDICAL | INSURANCE AUST vs. CVR Medical Corp |
| Sunstone Hotel vs. NTT DATA | Sunstone Hotel vs. Alibaba Health Information | Sunstone Hotel vs. SILVER BULLET DATA | Sunstone Hotel vs. EITZEN CHEMICALS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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