Correlation Between Playa Hotels and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Playa 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 Playa 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 Playa Hotels Resorts and Sunstone Hotel Investors, you can compare the effects of market volatilities on Playa 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 Playa Hotels with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Sunstone Hotel.
Diversification Opportunities for Playa Hotels and Sunstone Hotel
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and Sunstone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts 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 Playa 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 Playa Hotels Resorts 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 Playa Hotels i.e., Playa Hotels and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Playa Hotels and Sunstone Hotel
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 10.33 times more return on investment than Sunstone Hotel. However, Playa Hotels is 10.33 times more volatile than Sunstone Hotel Investors. It trades about 0.17 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.07 per unit of risk. If you would invest 975.00 in Playa Hotels Resorts on October 12, 2024 and sell it today you would earn a total of 195.00 from holding Playa Hotels Resorts or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Playa Hotels Resorts |
| Sunstone Hotel Investors |
Playa Hotels and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Sunstone Hotel
The main advantage of trading using opposite Playa Hotels and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa 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.| Playa Hotels vs. DEVRY EDUCATION GRP | Playa Hotels vs. Laureate Education | Playa Hotels vs. EVS Broadcast Equipment | Playa Hotels vs. COPLAND ROAD CAPITAL |
| Sunstone Hotel vs. PARKEN Sport Entertainment | Sunstone Hotel vs. ATRESMEDIA | Sunstone Hotel vs. Ubisoft Entertainment SA | Sunstone Hotel vs. REMEDY ENTERTAINMENT OYJ |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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