Correlation Between Sunstone Hotel and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Xenia 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 Xenia 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 Xenia Hotels Resorts, you can compare the effects of market volatilities on Sunstone Hotel and Xenia 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 Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Xenia Hotels.
Diversification Opportunities for Sunstone Hotel and Xenia Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunstone and Xenia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Xenia Hotels go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Xenia Hotels
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Xenia Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 1.13 times less risky than Xenia Hotels. The stock trades about 0.0 of its potential returns per unit of risk. The Xenia Hotels Resorts is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,310 in Xenia Hotels Resorts on August 25, 2024 and sell it today you would earn a total of 70.00 from holding Xenia Hotels Resorts or generate 5.34% 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. Xenia Hotels Resorts
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Xenia Hotels Resorts |
Sunstone Hotel and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Xenia Hotels
The main advantage of trading using opposite Sunstone Hotel and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Xenia 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| Sunstone Hotel vs. PTT Global Chemical | Sunstone Hotel vs. Sumitomo Chemical | Sunstone Hotel vs. BURLINGTON STORES | Sunstone Hotel vs. Mitsui Chemicals |
| Xenia Hotels vs. Science Applications International | Xenia Hotels vs. Warner Music Group | Xenia Hotels vs. DATANG INTL POW | Xenia Hotels vs. Datang International Power |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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