Correlation Between United Airlines and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Sunstone Hotel Investors, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Sunstone Hotel.
Diversification Opportunities for United Airlines and Sunstone Hotel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Sunstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings 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 United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Sunstone Hotel go up and down completely randomly.
Pair Corralation between United Airlines and Sunstone Hotel
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.6 times more return on investment than Sunstone Hotel. However, United Airlines is 1.6 times more volatile than Sunstone Hotel Investors. It trades about 0.35 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.16 per unit of risk. If you would invest 7,177 in United Airlines Holdings on September 2, 2024 and sell it today you would earn a total of 1,965 from holding United Airlines Holdings or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Sunstone Hotel Investors
Performance |
| Timeline |
| United Airlines Holdings |
| Sunstone Hotel Investors |
United Airlines and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Sunstone Hotel
The main advantage of trading using opposite United Airlines and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.| United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings | United Airlines vs. Origin Agritech | United Airlines vs. SIVERS SEMICONDUCTORS AB |
| Sunstone Hotel vs. Nippon Steel | Sunstone Hotel vs. VIAPLAY GROUP AB | Sunstone Hotel vs. ALGOMA STEEL GROUP | Sunstone Hotel vs. Perma Fix Environmental Services |
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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