Correlation Between Sunstone Hotel and Hudson Pacific
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Hudson Pacific 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 Hudson Pacific 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 Hudson Pacific Properties, you can compare the effects of market volatilities on Sunstone Hotel and Hudson Pacific 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 Hudson Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Hudson Pacific.
Diversification Opportunities for Sunstone Hotel and Hudson Pacific
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunstone and Hudson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific Properties 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 Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Hudson Pacific go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Hudson Pacific
Considering the 90-day investment horizon Sunstone Hotel Investors is expected to under-perform the Hudson Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 4.1 times less risky than Hudson Pacific. The stock trades about -0.28 of its potential returns per unit of risk. The Hudson Pacific Properties is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 281.00 in Hudson Pacific Properties on November 5, 2024 and sell it today you would earn a total of 32.00 from holding Hudson Pacific Properties or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Hudson Pacific Properties
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Hudson Pacific Properties |
Sunstone Hotel and Hudson Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Hudson Pacific
The main advantage of trading using opposite Sunstone Hotel and Hudson Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Hudson Pacific 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 Hudson Pacific will offset losses from the drop in Hudson Pacific'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 |
| Hudson Pacific vs. Kilroy Realty Corp | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Cousins Properties Incorporated | Hudson Pacific vs. Piedmont Office Realty |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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