Correlation Between Sunstone Hotel and Chatham Lodging
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Chatham Lodging 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 Chatham Lodging 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 Chatham Lodging Trust, you can compare the effects of market volatilities on Sunstone Hotel and Chatham Lodging 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 Chatham Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Chatham Lodging.
Diversification Opportunities for Sunstone Hotel and Chatham Lodging
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunstone and Chatham is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Chatham Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Lodging 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 Chatham Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Lodging Trust has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Chatham Lodging go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Chatham Lodging
Considering the 90-day investment horizon Sunstone Hotel Investors is expected to generate 0.85 times more return on investment than Chatham Lodging. However, Sunstone Hotel Investors is 1.17 times less risky than Chatham Lodging. It trades about 0.02 of its potential returns per unit of risk. Chatham Lodging Trust is currently generating about -0.03 per unit of risk. If you would invest 1,007 in Sunstone Hotel Investors on November 2, 2024 and sell it today you would earn a total of 142.00 from holding Sunstone Hotel Investors or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Chatham Lodging Trust
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Chatham Lodging Trust |
Sunstone Hotel and Chatham Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Chatham Lodging
The main advantage of trading using opposite Sunstone Hotel and Chatham Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Chatham Lodging 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 Chatham Lodging will offset losses from the drop in Chatham Lodging's long position.| Sunstone Hotel vs. RLJ Lodging Trust | Sunstone Hotel vs. Pebblebrook Hotel Trust | Sunstone Hotel vs. Summit Hotel Properties | Sunstone Hotel vs. Ryman Hospitality Properties |
| Chatham Lodging vs. Summit Hotel Properties | Chatham Lodging vs. RLJ Lodging Trust | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Whitestone REIT |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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