Correlation Between Sunstone Hotel and Ashford Hospitality
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Ashford Hospitality 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 Sunstone Hotel and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunstone Hotel Investors and Ashford Hospitality Trust, you can compare the effects of market volatilities on Sunstone Hotel and Ashford Hospitality 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 Sunstone Hotel with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Ashford Hospitality.
Diversification Opportunities for Sunstone Hotel and Ashford Hospitality
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunstone and Ashford is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Sunstone Hotel 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 Sunstone Hotel Investors are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Ashford Hospitality go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Ashford Hospitality
Assuming the 90 days trading horizon Sunstone Hotel is expected to generate 1.87 times less return on investment than Ashford Hospitality. But when comparing it to its historical volatility, Sunstone Hotel Investors is 2.02 times less risky than Ashford Hospitality. It trades about 0.02 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,387 in Ashford Hospitality Trust on November 2, 2024 and sell it today you would earn a total of 63.00 from holding Ashford Hospitality Trust or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Ashford Hospitality Trust
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Ashford Hospitality Trust |
Sunstone Hotel and Ashford Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Ashford Hospitality
The main advantage of trading using opposite Sunstone Hotel and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Ashford Hospitality 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 Ashford Hospitality will offset losses from the drop in Ashford Hospitality's long position.| Sunstone Hotel vs. Sunstone Hotel Investors | Sunstone Hotel vs. Pebblebrook Hotel Trust | Sunstone Hotel vs. DiamondRock Hospitality | Sunstone Hotel vs. Pebblebrook Hotel Trust |
| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts |
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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