Correlation Between Sunstone Hotel and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Sunstone Hotel and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Host Hotels.
Diversification Opportunities for Sunstone Hotel and Host Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunstone and Host is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Host Hotels go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Host Hotels
Considering the 90-day investment horizon Sunstone Hotel is expected to generate 1.24 times less return on investment than Host Hotels. But when comparing it to its historical volatility, Sunstone Hotel Investors is 1.02 times less risky than Host Hotels. It trades about 0.02 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,587 in Host Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 255.00 from holding Host Hotels Resorts or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Host Hotels Resorts
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Host Hotels Resorts |
Sunstone Hotel and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Host Hotels
The main advantage of trading using opposite Sunstone Hotel and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' 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 |
| Host Hotels vs. Service Properties Trust | Host Hotels vs. Diamondrock Hospitality | Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Ryman Hospitality Properties |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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