Correlation Between Silicon Motion and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Silicon Motion 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 Silicon Motion and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and Sunstone Hotel Investors, you can compare the effects of market volatilities on Silicon Motion 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 Silicon Motion with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Sunstone Hotel.
Diversification Opportunities for Silicon Motion and Sunstone Hotel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and Sunstone is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology 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 Silicon Motion 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 Silicon Motion Technology 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 Silicon Motion i.e., Silicon Motion and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Silicon Motion and Sunstone Hotel
Assuming the 90 days trading horizon Silicon Motion is expected to generate 3.31 times less return on investment than Sunstone Hotel. In addition to that, Silicon Motion is 1.22 times more volatile than Sunstone Hotel Investors. It trades about 0.04 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.18 per unit of volatility. If you would invest 925.00 in Sunstone Hotel Investors on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Sunstone Hotel Investors or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Silicon Motion Technology |
| Sunstone Hotel Investors |
Silicon Motion and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Sunstone Hotel
The main advantage of trading using opposite Silicon Motion and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion 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.| Silicon Motion vs. Norwegian Air Shuttle | Silicon Motion vs. WIZZ AIR HLDGUNSPADR4 | Silicon Motion vs. ELMOS SEMICONDUCTOR | Silicon Motion vs. Enter Air SA |
| Sunstone Hotel vs. Federal Agricultural Mortgage | Sunstone Hotel vs. THAI BEVERAGE | Sunstone Hotel vs. Monster Beverage Corp | Sunstone Hotel vs. Australian Agricultural |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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