Correlation Between Wayside Technology and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Wayside Technology 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 Wayside Technology and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayside Technology Group and Sunstone Hotel Investors, you can compare the effects of market volatilities on Wayside Technology 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 Wayside Technology with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayside Technology and Sunstone Hotel.
Diversification Opportunities for Wayside Technology and Sunstone Hotel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wayside and Sunstone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group 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 Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Wayside Technology and Sunstone Hotel
Assuming the 90 days horizon Wayside Technology Group is expected to generate 1.11 times more return on investment than Sunstone Hotel. However, Wayside Technology is 1.11 times more volatile than Sunstone Hotel Investors. It trades about -0.06 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 12,100 in Wayside Technology Group on November 27, 2024 and sell it today you would lose (300.00) from holding Wayside Technology Group or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayside Technology Group vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Wayside Technology |
| Sunstone Hotel Investors |
Wayside Technology and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayside Technology and Sunstone Hotel
The main advantage of trading using opposite Wayside Technology and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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.| Wayside Technology vs. Corsair Gaming | Wayside Technology vs. Fair Value Reit | Wayside Technology vs. Enter Air SA | Wayside Technology vs. ALTAIR RES INC |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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