Correlation Between Perma-Fix Environmental and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental 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 Perma-Fix Environmental and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perma Fix Environmental Services and Sunstone Hotel Investors, you can compare the effects of market volatilities on Perma-Fix Environmental 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 Perma-Fix Environmental with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and Sunstone Hotel.
Diversification Opportunities for Perma-Fix Environmental and Sunstone Hotel
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perma-Fix and Sunstone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic 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 Perma-Fix Environmental 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 Perma Fix Environmental Services 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 Perma-Fix Environmental i.e., Perma-Fix Environmental and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Perma-Fix Environmental and Sunstone Hotel
Assuming the 90 days trading horizon Perma Fix Environmental Services is expected to generate 2.39 times more return on investment than Sunstone Hotel. However, Perma-Fix Environmental is 2.39 times more volatile than Sunstone Hotel Investors. It trades about 0.07 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.16 per unit of risk. If you would invest 1,280 in Perma Fix Environmental Services on September 2, 2024 and sell it today you would earn a total of 70.00 from holding Perma Fix Environmental Services or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perma Fix Environmental Servic vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Perma Fix Environmental |
| Sunstone Hotel Investors |
Perma-Fix Environmental and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perma-Fix Environmental and Sunstone Hotel
The main advantage of trading using opposite Perma-Fix Environmental and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental 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.| Perma-Fix Environmental vs. Veolia Environnement SA | Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings | Perma-Fix Environmental vs. Origin Agritech |
| Sunstone Hotel vs. Nippon Steel | Sunstone Hotel vs. VIAPLAY GROUP AB | Sunstone Hotel vs. ALGOMA STEEL GROUP | Sunstone Hotel vs. Perma Fix Environmental Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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